Oral Answers to Questions

TRANSPORT

The Secretary of State was asked—

Roads (Permitted Vehicles)

Bill Wiggin: Whether she plans to permit longer heavier vehicles on some roads; and if she will make a statement.

Ruth Kelly: With permission, Mr. Speaker, I would like to take this opportunity to pay tribute to Gwyneth Dunwoody, who died last week. It is on occasions such as these that her absence will be sorely felt. Gwyneth had a passion for social justice, was incredibly knowledgeable about transport issues, as was clear from her chairmanship of the Transport Committee, and always made pertinent, if sometimes mischievous, contributions to debates. I am sure that the House will agree that Gwyneth was a truly outstanding parliamentarian and a great servant of the people. She will be sadly missed in all parts of this House.
	In respect of Question 1, I am yet to receive the research report on this subject, but I have no plans to allow so-called super-lorries on UK roads.

Bill Wiggin: I served on the Transport Committee under Gwyneth Dunwoody, and I think that she would appreciate the Secretary of State's comments.
	Rail freight groups estimate that every tonne of freight carried by rail saves about 80 per cent. of the carbon emissions that that freight would have generated if it had been transported by road. Why have the Government abandoned their target to increase rail freight by 80 per cent. by 2010?

Ruth Kelly: The hon. Gentleman completely misunderstands the facts of the case. In fact, last year, we invested £17 million in removing 1 million lorry journeys from UK roads. We are committed to building on that success and, in the past year, we announced the single biggest package of investment in rail freight infrastructure for decades—£150 million. Rail freight has already gone up by 50 per cent. We are committed to a review, leading to a Green Paper that examines the transport challenges for the UK economy. As part of that, we will perform a specific piece of work to review the contribution that freight can make to our economic success.

Stephen Hepburn: Will the Minister explain to me where the fairness is in letting foreign hauliers use our roads free of charge when our hauliers go to the continent and have to pay £7 a day?

Ruth Kelly: My hon. Friend makes a valid point about whether there is fair, or indeed unfair, competition on British roads. I am completely committed to ensuring a level playing field for UK hauliers and foreign hauliers. It was absolutely right that we considered the so-called vignette scheme, which proposed a daily charge for non-British lorries that use UK roads, although even the haulage industry decided that that was probably too complex and costly to implement. However, I am stepping up significantly enforcement against hauliers on road safety grounds, and have just announced additional investment of £24 million to ensure that there are no infringements of road safety rules.

Malcolm Moss: May I make a plea to the Secretary of State not to allow any longer heavier vehicles on the A14 through Cambridgeshire, which has one of the worst accident records in the country, with 52 fatalities in the past 10 years alone? The latest, only three weeks ago, in which a heavy lorry killed a young single mother, was highlighted in a campaign by  Cambridge News. Will the Minister undertake to prioritise all the Cambridgeshire A14 improvements so that heavier lorries can make safe passage through Cambridgeshire from the east coast ports to the midlands and the north?

Ruth Kelly: The hon. Gentleman is absolutely right that safety should be a key consideration when deciding whether road improvement schemes should go ahead. That is one of the issues that we will consider in determining whether the A14 is a priority for additional investment. We are reviewing all our road schemes and intend shortly to make an announcement on which will be priorities.

Stephen Ladyman: May I associate myself with my right hon. Friend's comments about Gwyneth Dunwoody? She was a tough cookie, but she was our tough cookie. She will be very much missed.
	The hon. Member for North-East Cambridgeshire (Mr. Moss) does not seem to realise that it is Conservative party policy to allow longer heavier lorries on the roads of Great Britain. Will my right hon. Friend think very carefully before she allows that, because they will almost certainly be taken through our rural villages causing untold damage?

Ruth Kelly: My hon. Friend takes a huge interest in this subject, and I know that he has a track record of considering the case for longer heavier vehicles. He makes a pertinent point about the Conservatives' policy, and I have a huge amount of sympathy with his points. We should be concerned about congestion and road safety and, on environmental grounds, we should think about the most effective way of moving freight around this country. That is why I have said that I would need a huge amount of persuasion to allow so-called super-lorries on British roads.

John Leech: What assessment has the Secretary of State made of the financial implications for road maintenance of allowing longer heavier lorries on to our roads?

Ruth Kelly: We have taken a long detailed look at the issues, not just in government, but through our work with the road haulage industry, to see whether it would be possible to introduce a scheme that would take account of the infrastructure and maintenance costs for British roads. The study concluded that it would not make sense to introduce such a scheme within the current framework of EU legislation; it would be too complex and costly to introduce, and the benefits would not exceed the costs.
	There are alternative ways of ensuring that British hauliers do not suffer from unfair competition. I am determined to ensure that they do not, and the key to that is considering the impact on road safety. We need to ensure that there are no incentives for non-UK hauliers to break the rules. That is why enforcement is so important and it is why we have stepped up significantly the level of enforcement against hauliers who break the rules—indeed, we have doubled it in the past year.

Chris Bryant: One of the problems with the larger lorries already allowed on British roads is that they use not only the slow lane on motorways or dual carriageways, but often overtake, sometimes sandwiching smaller cars. Will the Secretary of State consider rolling out throughout the whole UK the pilot that has been introduced in one part of the country so that, as in other European countries, lorries may drive only in the slow lane?

Ruth Kelly: My hon. Friend makes an absolutely excellent point. I am determined to ensure that rather than automatically jumping to the conclusion that extra capacity is needed on British roads, we think first and foremost about the best use of our existing network. That might mean bringing the hard shoulder into use, and if we decide to do so, we should think about how that extra space is used. One possibility is that we reserve it for car-share lanes, but we could also think about whether crawler lanes might be appropriate for longer heavier vehicles. We will review, motorway by motorway, the use of extra capacity to ensure that it is used to best effect.

Robert Goodwill: On 19 November, the Under-Secretary of State for Transport, the hon. Member for Poplar and Canning Town (Jim Fitzpatrick), told me that this already overdue report would be published in three months. It is now six months later, and people are starting to wonder whether someone is sitting on it. The Conservative party has not come to a view on longer heavier vehicles, but the evidence in the report might help us to do so. Will the Secretary of State at least publish the evidence, even if she cannot reach her own conclusions?

Ruth Kelly: I have already made it clear that this is a complex issue. The report should be published in a matter of months, if not weeks, but it certainly should be published before the summer recess, when everyone in the House will have the opportunity to determine their view on longer heavier vehicles. I have already said that I would need a huge amount of persuasion that super-lorries are the answer to congestion on our roads, but I look forward to hearing any policy pronouncement of any kind from the Conservatives on congestion.

Rail Services (Edinburgh to North-West England)

Mark Lazarowicz: If she will take steps to encourage the train operating company to improve the journey times and frequency of rail services from Edinburgh to north-west England.

Tom Harris: Journey times will be accelerated on most trains between Edinburgh and Manchester, Warrington and Preston from the start of the December 2008 timetable. From the same date, the train operator for the Edinburgh to Manchester airport route intends to increase the number of services that it provides.

Mark Lazarowicz: It takes almost as long to go by train from Edinburgh to Manchester as it does to go from Edinburgh to London, even though the latter journey is twice the distance. Some welcome improvements have been made, but there is a real opportunity, even with existing rolling stock—and certainly with the new rolling stock that is coming in—substantially to improve journey times between Edinburgh and north-west England, which would benefit business and leisure passengers and help to shift air and road passengers on to the railways. I urge my hon. Friend to meet the rail companies to ensure that such improvement continues, with further improvements in the timetable next year.

Tom Harris: My hon. Friend has a long track record of campaigning on these issues. He will know that I meet all the train operating companies regularly to discuss levels of service, including the journey times between particular stations. As I have already said, the journey times that concern my hon. Friend will improve from the end of this year. We are always in the market to achieve improvements to journey times, but there is a trade-off between the number of stations that any service can serve and end-to-end journey time. Once we have struck the correct balance, I am sure that services serving my hon. Friend's constituency will improve in the long and short term.

John Reid: May I associate myself with the tributes to Gwyneth Dunwoody? Those of us in the long line of former Transport Ministers who withered under her scrutiny will remember her fondly and miss her greatly.
	I thank the Minister for the news of faster train journeys, but would he not agree that most passengers actually want a more regular pattern of service and trains that are punctual and reliable?

Tom Harris: My right hon. Friend is absolutely correct. Under this Government, performance has improved by 10 per cent. over the past five years. We are committed also to improving rolling stock, with the introduction of 1,300 brand new carriages over the next five years. As he will be aware, today we have the youngest rolling stock of any European country.

M6 (New Junctions)

Ben Wallace: What her policy is on the construction of new junctions on the M6.

Tom Harris: The Government's policy on the construction of new junctions on the motorway network, including the M6, is set out in "Circular 2/07: Planning and the Strategic Road Network", which the Department published in March 2007. The policy states that there is a general presumption against additional access to motorways and other routes of strategic national importance.

Ben Wallace: Because of the urban spread in my constituency around Preston and Blackpool, my local A roads are under tremendous traffic pressure. Lancashire county council's solutions for relieving that involve two options—a new junction on the M6 or a new one on the M55—so will the Minister consider reviewing that guidance?

Tom Harris: Guidance is exactly that: guidance. Ministers have some discretion to go beyond that guidance when that seems necessary. For example, if it is necessary to create a new junction on a strategic road to accommodate a growth area or an attraction, that option is open to us. I would have expected the local authorities in the hon. Gentleman's constituency to work with the Highways Agency to come up with alternative solutions so that we did not need to create any extra junctions on any motorway. However, we analyse all situations case by case. If there is a case for creating an extra junction, I will be happy to consider it, but I would be reluctant to move from the stated policy as it is designed to ensure the free flow of traffic and maintain our high levels of road safety.

Andrew Miller: May I associate myself with the remarks about my fellow Cheshire Member, Gwyneth Dunwoody? She was a formidable lady, although, sadly, at the end of her life here I was in disagreement with her.
	Will my hon. Friend the Minister think particularly about junctions at the northern end of the M6? However, before he gives that any priority, will he ensure that he cross-references his studies with his work on railways? I am convinced that significant gains could be made to the flow of freight by getting more freight on the railway on the southern side of the River Mersey. If we do that, there will be less need to change the structure of the M6.

Tom Harris: My hon. Friend makes the particularly valid point that road and rail planning should go hand in hand. I want to get as much freight on to the railways as possible. We have to assume that roads will continue to carry the vast majority of freight in the long term. However, with that in mind, it is incumbent on local authorities and the Highways Agency to ensure that our infrastructure is fit for purpose.

Mark Pritchard: The Minister will know that many of my constituents travelling south from Shropshire use either the M6 or the M6 toll road. Will he give my constituents an update on the extension of the M6 toll road connected to the M54 and, most importantly, give a commitment to them and me today that no toll will be introduced on the M54?

Tom Harris: I can confirm that there are no plans to impose a toll on the M56. [Official Report, 29 April 2008, Vol. 475, c. 4MC.] I can also tell the hon. Gentleman that the plans to extend the toll road northwards are no longer going to be progressed. However, the whole policy on the strategic road network, and the question of how we make the most effective use of its capacity, are the subject of a study being undertaken by the Department. That study will consider not only road pricing, but active traffic management, which has been such a success on the M42.

Patrick Cormack: Can the hon. Member for Stafford (Mr. Kidney) and I both now take it that the ridiculous idea of building a motorway parallel to the M6 through Staffordshire has been abandoned once and for all?

Tom Harris: We have no plans at the moment to build parallel motorways to the M6 or any other motorways.

Local Transport Plans

David Anderson: What guidance her Department has issued to local authorities on the development of local transport services through local transport plans.

Rosie Winterton: The Department for Transport issued guidance to local authorities about local transport plans in December 2004. It also issued advice in 2007 about reviewing progress on delivery of transport plans.

David Anderson: I thank the Minister for her response. May I say, on behalf of the people I represent, that they are very glad that, at long last, they are going to get back some local control over public transport services? Does my right hon. Friend agree that the Conservatives oppose these plans simply because they would still rather put private profit before public services?

Rosie Winterton: My hon. Friend is quite right to express amazement at the fact that the Conservatives decided to vote against the Local Transport Bill on Second Reading. All Labour Members appreciate the need to improve our bus services, to increase the integration of public transport and to improve community transport. It is beyond belief that the Conservatives do not support those principles. I also believe that they are completely out of step with Conservative local councillors whom I meet around the country, who say that this is exactly—

Mr. Speaker: Order. Perhaps we can have ministerial answers now. We can talk about ministerial responsibility.

Anne McIntosh: May I join the Secretary of State in paying tribute to Gwyneth Dunwoody? A corner of this Chamber will be for ever Gwyneth's.
	I invite the Minister to explain the role of regional development agencies in strategic transport planning, in particular for roads such as the A64 between York and Scarborough that have a strategic role but are inherently unsafe. Between us, we need to find the money to improve that road.

Rosie Winterton: The regional transport board has responsibility for prioritising the regional funding allocation and it decides the priority for allocations to roads such as that mentioned by the hon. Lady. In the proposals on the sub-national review, transport comes under the auspices of the regional development agencies, and the agencies and the regional assemblies are responding to those proposals and determining how they would like such strategic transport issues to work. The consultation on that closes in June, and the hon. Lady will no doubt wish to respond to it herself.

Sharon Hodgson: Does the Minister agree that it is important that local authorities retain a role in planning local transport services to ensure that buses cannot be removed or rerouted because they are deemed to be unprofitable, regardless of their value to local residents?

Rosie Winterton: My hon. Friend is quite right. That was why the Government introduced local transport plans—for which, incidentally, funding has doubled since 2001—which made local authorities responsible for taking an integrated approach on local transport. The Local Transport Bill, which is now going through Parliament, will give local authorities more powers to introduce quality partnership schemes and quality contracts, which have been widely welcomed by local authorities in all parts of the country, and, incidentally, by all political parties. During our discussions on the Bill, I hope that we will be able to persuade Conservative Front Benchers at last to support these proposals.

Philip Hollobone: Following the opening of the new railway line between Kettering and Corby later this year, there will be a danger that the bus service operating between the two towns will be lost. It provides an important service for local people, particularly to the local hospital. Will the Minister encourage, through her departmental guidance, the relevant local authorities to retain this important bus service when the rail link is established?

Rosie Winterton: We ask local authorities, when framing their local transport plans, to look into how to integrate their transport services. The Local Transport Bill will give local authorities greater powers over bus services, so the hon. Gentleman might like to talk to his local authority—and, perhaps, his Conservative councillors—about what plans they might like to bring in under the Bill and then perhaps persuade Front Benchers to support them.

David Clelland: May I pay my tribute to Gwyneth Dunwoody, who will be sadly missed by all who knew her and who worked for her?
	Does the Minister agree that the best way to achieve successful local transport plans is to ensure that transport authorities continue to be made up of democratically elected and accountable local representatives?

Rosie Winterton: I know that my hon. Friend will be feeling very deeply the departing of Mrs. Dunwoody? I know from my most recent appearance before the Transport Committee that he was with her when she was conducting its inquiry into blue badges.
	On having elected people on passenger transport authorities and the future integrated transport authorities, it is true that we want to give local areas the right to co-opt other members—for example, representatives of passenger groups—on to those authorities, if it is felt that that would be helpful. However, we have said very firmly that the majority of voting members must be elected councillors. I hope that that reassures my hon. Friend.

Louise Ellman: I, too, would like to pay tribute to Gwyneth Dunwoody. Indeed, it seems very strange to be here at Transport questions without her watchful eye over proceedings.
	Will the Minister tell us what guidance has been issued on light rail, with particular reference to light rail in Merseyside?

Rosie Winterton: Recent guidance has been issued—I understand that it is available on the Department's website—setting out the Department's exact views on light rail schemes and how to take their construction forward.

Concessionary Bus Travel

Desmond Swayne: What steps she is taking to promote concessionary bus travel across county boundaries.

Rosie Winterton: rose—

Desmond Swayne: Chop, chop!

Rosie Winterton: From 1 April—chop, chop—the Government implemented the new statutory minimum entitlement to concessionary travel so that up to 11 million older people and eligible disabled people could travel free at off-peak times on buses in any part of England, not just in the area where they live.

Desmond Swayne: Notwithstanding the millions of pounds that the Minister boasts of having distributed, is she aware of the disaster being visited on communities, particularly those on the western edges of counties, as county councils attempt to balance the interests of the council charge payer with the traveller and reduce the service in order to be able to afford concessionary fares? Does she realise that it is a fat lot of use having a free bus pass if there is no bus to travel on as a result? Does she know that although 11 million passes have been issued, there are hardly any buses that can process them?

Rosie Winterton: The additional allocation in the hon. Gentleman's area for 2008-09 was £493,000, which represents a 48 per cent. increase—48 per cent.—over the spending in 2006-07. I would hope that the hon. Gentleman welcomes a scheme introduced by a Labour Government to help older people in this country and to save them considerable amounts. I hope that he will encourage people in his local area to take it up.
	As for the hon. Gentleman's point about bus services, I urge him to ask local councillors what they feel about the Local Transport Bill. I shall be very surprised if they are not supporting our plans for quality partnership schemes and quality contracts.

Stephen Hammond: They are not.

Rosie Winterton: I agree. Certainly everyone I have met supports our proposals. If the hon. Member for New Forest, West (Mr. Swayne) has that conversation with local councillors, I suggest that he then discuss with Conservative Front Benchers whether they will support them as well.

Gavin Strang: As a former Transport Minister, I, too, pay tribute to Gwyneth Dunwoody. She was a great parliamentarian.
	I congratulate my right hon. Friend and her colleagues on the introduction this month of the English national concessionary travel scheme. In Scotland, we have had such a scheme for some years, and it has given a tremendous boost to elderly people in particular. However, some elderly people living close to the English border with Wales and Scotland do not enjoy as much free travel as we should like. Is it possible that in due course concessionary travel can be extended throughout Great Britain?

Rosie Winterton: It is refreshing to hear my right hon. Friend welcome and celebrate the proposals for older people, rather than adopting the mealy-mouthed approach of the Conservative party. As he might know, we have had some discussions about the issue of cross-border travel, and many services can already cross county borders. We want to ensure that the English scheme settles down before looking further, but although that has been a priority, it does not rule out further discussions in the future.

Andrew Turner: There is no help for buses trying to provide services to and from the Isle of Wight. What are the Government doing to improve the position?

Rosie Winterton: What the Government are doing to improve bus services is introducing the Local Transport Bill, which gives local authorities more powers to improve services and work with operators in their areas. I am glad that the hon. Gentleman supports that direction of travel, as it were. I urge him, too, to talk to local Conservative councillors about their views, and then talk to his party's Front Benchers.

Jessica Morden: I welcome the Minister's remarks about cross-border travel. What discussions are taking place with the Welsh Assembly Government to enable my constituents to travel freely on buses between Wales and England, and within what time scale will we see that benefit?

Rosie Winterton: As I explained earlier, if buses are simply to cross the border, agreements can be made between the local authorities concerned. We wanted to ensure that the system in England was implemented from 1 April and that all the passes were issued before proceeding to further discussions. There are, of course, enormous financial implications for the extension of the scheme to Wales and Scotland, and I am sure that my hon. Friend will understand that we must take them very seriously.

David Simpson: May I add my voice to the tributes paid to Gwyneth Dunwoody? She was a great friend of my party and its leader, and a great friend to the people of Northern Ireland, where she was held in high esteem.
	How does the Minister expect the concessionary travel schemes across the United Kingdom to interlock in the coming years, and what is her estimate of the increase in the number of people availing themselves of the schemes?

Rosie Winterton: As I have explained, our first priority was to ensure that the English scheme was implemented and the cards sent out. The option remains for us to extend the scheme more widely, but we need to consider issues such as financial implications. The extension of the scheme has not been ruled out, but we must take those issues into account.

Andrew Love: Will my right hon. Friend congratulate London and its Mayor on the comprehensive bus pass and the very efficient bus service in the capital? There is currently a proposal before the capital to get rid of the modern single-decker buses that have been provided and to replace them with the old Routemaster. Has my right hon. Friend done a cost-benefit analysis of the use of the Routemaster, and is that bus appropriate in the 21st century for a capital city such as London?

Rosie Winterton: My hon. Friend is right to congratulate the Mayor of London on the freedom pass; it has been immensely valuable to the residents of London. What they ought to be worried about to start with is the fact that the Conservative Front Bench has said that if— [Interruption.]

Mr. Speaker: Order. I must stop the Minister. We must not get on to the London elections.

Stephen Hammond: Thank you, Mr. Speaker. Now we can hear the authentic voice of the Conservative Front Bench. National free bus travel was supposed to start on 1 April. Amidst all the contributions today, the Minister is forgetting that because of its botched introduction hundreds of thousands of pensioners were unable to travel as the smartcards and temporary passes the Government had promised them were not available. Why did the Government so badly botch the introduction of national concessionary travel, and how many hundreds of thousands of pensioners were prevented from travelling—and how many are still prevented from travelling?

Rosie Winterton: Once again the Conservative Front Bench is attacking local authorities who actually have done quite a lot of— [Interruption.] Obviously, the hon. Gentleman does not understand how passes are distributed. That was done by local authorities. The Government purchased 4 million temporary passes in case local authorities got into difficulties, because distributing more than 11 million passes over the course of a year was a huge undertaking. The authorities should be congratulated on the work that they did, instead of once again being beaten over the head, which is what the Opposition Front Bench wants to do. About 99 per cent. of passes have been distributed. Some people who applied later—they might not have been aware of the introduction of the free pass—have experienced a delay. However, the Department for Transport bought 4 million temporary passes, which can be used with people's existing passes up until September of this year. I congratulate the local authorities and others who worked very hard to get these passes distributed, and the Conservative Front Bench should join me in that.

Road Congestion

Robert Flello: What steps she is taking to encourage local authorities to tackle road congestion.

Ruth Kelly: We have given local authorities new powers and resources to tackle congestion. Additional resources are available through the transport innovation fund and the congestion performance fund.

Robert Flello: Will my right hon. Friend ensure that her Department urgently holds talks with Stoke-on-Trent city council about the damaging impacts on road congestion and the worrying increased risks to pedestrians and other road users if the city council's misguided and misinformed decision to close Trentham high school and Longton high school goes ahead?

Ruth Kelly: I am afraid that I am not familiar with the school closures proposed in my hon. Friend's constituency, although I know he has been a great champion for his constituents. Local councils should think seriously about congestion across their boroughs and make sensible local decisions that support tackling that. I would be happy to look into the case my hon. Friend raises, and to meet him to talk about it.

Nicholas Winterton: May I, as a Cheshire MP, pay my tribute to Gwyneth Dunwoody? She was a robustly independent socialist, and she did great credit to this House over many years.
	Macclesfield in east Cheshire looks to Stoke-on-Trent, part of which is represented by the hon. Member for Stoke-on-Trent, South (Mr. Flello), with great envy. Huge sums of money—multi-millions of pounds—have been spent on the A50 and the A500. Will the Secretary of State ensure that there is a fairer distribution of funds to other areas that need the sort of road improvement that has taken place in Stoke-on-Trent? Macclesfield deserves a better deal.

Ruth Kelly: I certainly believe in devolution; all my political life I have argued that local authorities and regions should have more funds at their disposal and more authority about how they use those resources. I am sure that the hon. Gentleman will be pleased to learn that we have introduced the regional funding allocation, which gives local regions the power to determine what their own priorities are. I suggest that he makes the case to them that they should be spending the money in Macclesfield.

Nicholas Winterton: I have.

Ken Purchase: Does the Secretary of State agree that this approach should involve more park and ride schemes? If she does, does she also agree about the importance of discussion and agreement between her Department and the Department for Communities and Local Government, which often makes decisions on planning applications, to ensure that park and ride schemes, particularly those that can make a major contribution to reducing congestion, such as schemes on the A449 in my constituency, go ahead with all the normal safeguards as quickly as possible?

Ruth Kelly: I agree with the point that my hon. Friend is making. Park and ride schemes can make a tremendous contribution to tackling congestion. In fact, local authorities should be free to determine how they tackle congestion in their local areas, and how they get people out of their cars and on to buses. I know that the local authorities are welcoming the powers that we are giving them to have more say over how buses are regulated. I hope that the hon. Member for Chipping Barnet (Mrs. Villiers) will take that into account when she explains to local authorities up and down the country why the Conservatives voted against the Local Transport Bill just last month.

Julian Brazier: The highly successful and expanding port of Dover is putting 100 miles of lorries a day on to Kent's road network. What steps is the Secretary of State taking to discuss with Kent county council measures to tackle the problems of Operation Stack and its knock-on effect on the wider road system?

Ruth Kelly: I know that the Under-Secretary of State for Transport, my hon. Friend the Member for Glasgow, South (Mr. Harris), who deals with these issues, is having lots of discussions, including some with Kent county council, about how to take container lorries off British roads and encourage freight on to the rail network. It is right that we examine these matters on a scheme-by-scheme basis across the country, and that we consider how we can move freight around in the most efficient way possible and how we can do that with the minimum impact on the environment. That is why last year we invested the single biggest sum for a generation—£150 million—in encouraging rail freight infrastructure and why, in the rail White Paper, we committed ourselves to investing another £200 million in the strategic freight network. Those investments will provide real benefits to the freight industry, and I hope that they will keep the lid on road container traffic and encourage more vehicles off the roads and on to rail.

Speed Cameras/Vehicle-activated Signs

Angela Watkinson: What assessment she has made of the comparative cost-effectiveness, in terms of improving road safety, of speed cameras and vehicle-activated signs.

Jim Fitzpatrick: No comparative assessment has been made. Safety cameras and vehicle-activated signs are used to tackle different road safety problems. Safety cameras are effective in tackling excessive speed—speeds over the posted speed limit. Vehicle-activated signs are generally used to tackle inappropriate speed, and have proven particularly effective when used to warn drivers of approaching hazards on rural roads.

Angela Watkinson: The cost of a speed camera, including installation, is about £50,000, whereas the cost of a vehicle-activated sign is only £1,000. The Department for Transport's own figures say that 2.2 accidents are estimated to be prevented by a speed camera in one year, whereas vehicle-activated signs are estimated to prevent 3.1 accidents. Does the Minister therefore agree that the Department's own figures show that not only are vehicle-activated signs more effective in improving road safety, but they are very much better value for money? Will he consider introducing a policy that vehicle-activated signs should be given preference over speed cameras wherever the location is appropriate?

Jim Fitzpatrick: The decision about which type of camera to deploy and where is very much a matter for local road safety partnerships, which receive £110 million extra a year to do that. I am not sure where the hon. Lady found her figures. The four-year independent evaluation report on the 4,100 speed camera sites, published in 2005, recorded a 42 per cent. reduction in serious crashes a year, meaning 100 fewer deaths and 1,600 fewer seriously injured—as opposed to the two or three that she mentions. Our figures are at variance and I would be happy to discuss them with her, because I know that the objective for the whole House is to reduce the numbers needlessly killed or seriously injured on our roads.

Jeff Ennis: The Minister will know that nationally many road safety cameras are subject to vandalism, presumably by motorists who have been caught by them. Does the Minister agree that people who are found guilty of such crimes should be severely punished?

Jim Fitzpatrick: It is easy to answer that question by simply saying yes. Speed cameras are delivering road safety targets that we all want to see. Some 3,000-plus people die and nearly 30,000 are seriously injured every year on our roads. Speed cameras are demonstrably helping to reduce those figures, and anybody who is selfish enough to damage the cameras because they have been careless enough to have been caught breaking the rules should feel the full weight of the law.

Topical Questions

John Penrose: If she will make a statement on her departmental responsibilities.

Ruth Kelly: Free off-peak concessionary bus travel throughout England was introduced on 1 April, enabling 11 million older and disabled people in England to use buses anywhere across the country. I also announced that Passenger Focus would be the first national bus passenger champion, speaking up on behalf of millions of bus users.
	Today I laid a written ministerial statement announcing a review of the framework of economic regulation of the UK airport system. The review will be advised by a panel of independent experts led by Professor Martin Cave.

John Penrose: Is the Secretary of State aware that the Highways Agency is refusing to increase the capacity of junction 21 of the M5 in my constituency until more local jobs have been created to reduce the number of people who commute into Bristol each day? The regional spatial strategy, which would have achieved exactly that, has just been amended by Government-appointed planners to allow even more houses to be built without the necessary local jobs. The result is deadlock and misery for my constituents, stuck in the resulting appalling jams. Will she therefore liaise urgently with her colleagues at the Department for Communities and Local Government to ensure that the Government's left hand knows what their right hand is doing?

Ruth Kelly: It is important not only that we have the housing that future generations will desperately need, but that we have the appropriate transport infrastructure to support that housing growth. In fact, my Department has been working closely with the Department for Communities and Local Government to support, for example, new growth points, where we have invested £4 billion to support new housing developments. Of course I am happy to look into the specific case that the hon. Gentleman cites, but he can rest assured that the Government work to provide both the appropriate housing and the appropriate infrastructure.

David Chaytor: The production of some forms of biofuels is causing increases in global food prices and does not represent the cheapest way to reduce greenhouse gas emissions. Can my right hon. Friend tell us when the Government intend to introduce the sustainability standards for biofuels? Does she accept that the use of recycled cooking oils to manufacture biodiesel is a 100 per cent. recyclable form of biofuel that is encouraging small businesses in different parts of the country? Will she ensure that that form of biofuel is supported in any future policy change?

Ruth Kelly: I know how concerned my hon. Friend is about these issues and he is right to point to the global impact of rising food prices. I am sure that he will appreciate that biofuels account for only some 2 per cent. of total food production and that other international factors are involved, such as recent droughts and an increasing demand for meat in preference to crops. Our system for supporting biofuel production in the UK must be sustainable. That is why we have introduced a world class sustainability reporting mechanism and the renewable transport fuels obligation at the cautious level of 2.5 per cent. It is why we are determined not to go beyond the level of 5 per cent. in 2010 without making sure that there are mandatory sustainability standards in place. My hon. Friend will know, too, that I have commissioned an independent study led by Professor Gallagher of the Renewable Fuels Agency to consider all the indirect effects of biofuel production.

Theresa Villiers: I start by joining the hundreds of people inside and outside the House who have paid tribute to Gwyneth Dunwoody. She was a great parliamentarian. We will not only miss her today; I am sure that the House will miss her for many years to come. She was hugely influential on all transport matters and her outspoken approach was a real asset not only to the House but to the wider transport community, for which she did so much hugely valuable work.
	My question for the Secretary of State is: if the Competition Commission recommends the break-up of BAA's monopoly over airports in the south-east, will she promise to implement that recommendation?

Ruth Kelly: I think that the hon. Lady will realise that the Government have a history of respecting the conclusions of the independent Competition Commission. It is of course the expert in that matter and it is right that it should have the time and space to consider the issues carefully. It is right, too, that we should think in government about how to raise standards of service for passengers. That is why this morning I commissioned a review led by an independent professor, Professor Martin Cave, to advise the Government on what the appropriate economic regulatory regime ought to be for the future.

Theresa Villiers: We still cannot get a straight answer from the Government on the future of the monopoly enjoyed by their friends at BAA. Anyone who has been through the notorious Heathrow hassle or experienced the T5 debacle knows that BAA too often gives a dismal standard of service to its customers, yet the regulator recently awarded it with double-digit price increases. Is it not time to call time on the BAA monopoly on airports in the south-east, toughen up a toothless regulatory regime and put the interests of passengers first?

Ruth Kelly: I suggest that the hon. Lady actually reads the Competition Commission's report. I spent several hours this morning going through the 160-odd pages of the report. Surely she will have noticed that it says clearly on page 12:
	"Lack of capacity, particularly runway capacity, at the south-east airports...appears to be a main reason for the current poor standards of service at the airports and lack of resilience at times of disruption."
	Surely it is now time for the hon. Lady, rather than criticising the Government, to wake up to the facts of the situation and reconsider her opposition to expansion at Heathrow subject to the local environmental conditions—a policy that has everything to do with short-term political opportunism and nothing to do with Britain's long-term prosperity.

David Anderson: The Secretary of State is very aware of the problems around the western bypass in Gateshead. Can she give me an update on progress on that matter?

Tom Harris: My hon. Friend has campaigned on that issue for a long time. I share his concern that we have to see some progress on that project. However, he knows that widening that section of the A1 is likely to be complex and costly and will take time to deliver. However, the Highways Agency is aware of my concern to make progress. I am happy to discuss the matter with my hon. Friend in the near future. He will also know that the Highways Agency is investigating the possibility in the meantime of low-cost measures to improve the operation of the A1, including options for improving accident and incident management and speeding up the clearance of accidents.

Evan Harris: The Secretary of State has required First Great Western to implement a remedial plan; otherwise its franchise will be taken away. Will she tell me, on behalf of the long-suffering passengers from Oxford and Abingdon and throughout the region, when that remedial plan will be evaluated? When can we expect to see significant improvements or a change of franchisee?

Tom Harris: The remedial plan, which has now been contractualised in the First Great Western franchise, will be monitored on an ongoing basis. As far as the latter part of the hon. Gentleman's question is concerned, I expect and hope that we will see significant improvements in First Great Western's performance in the next few months.

Robert Flello: The boiler suits are lined up, the paintbrushes are ready, the paint pots are waiting. Will my hon. Friend join me at Longton railway bridge to do Network Rail's job for it, or does he have some good news for me at last?

Tom Harris: It may well be that following the next reshuffle, I will have some spare time on my hands, in which case I would be more than happy to take up my hon. Friend's offer. In the meantime, however, I am more than happy once again to write to Network Rail to ask it whether it will prioritise that job. I have to point out that as a Minister, I cannot instruct Network Rail to do so, but I can ask whether it has any plans to do so.

Norman Baker: On behalf of my Liberal Democrat colleagues, may I, too, say how sad we were to learn of Gwyneth Dunwoody's death? She was an independent spirit, and we on these Benches had a lot of time for her.
	On aviation—I note in passing that the Tory Members of the Transport Committee voted against breaking up BAA—the Minister will be aware that the average carbon emissions from air travel per passenger mile are considerably higher than they are by rail. Yet a parliamentary answer that I received yesterday showed that the cost of travelling by air had decreased by 50 per cent. over the past 10 years, whereas the cost of travelling by rail had increased by 6 per cent. What will the Secretary of State do to try to ensure that the cost of travelling bears more relation to the carbon emissions?

Ruth Kelly: I know how deeply the hon. Gentleman cares about carbon emissions and the difference in the amount of carbon emitted by different means of travel. I know, too, that he is in favour of high-speed rail, but the fact of the matter is that we cannot jump to conclusions on any of these issues. The speed of the railway service is intimately connected with the amount of carbon produced. A high-speed rail line, for example, emits approximately double the carbon of a lower-speed rail service. We are going to need in this country both aviation, which will serve the interests not just of London but of the wider UK economy, and a decent rail service, at prices that people can afford.
	I looked at rail fares recently and discovered that 80 per cent. of journeys between London and Manchester could be taken at a price that I think was less than £35. There is clearly a huge difference between turning up and asking for a premium rate fare and booking in advance. I encourage the hon. Gentleman to keep these things in perspective and recognise the fact that it is this Government who are taking the tough decisions on aviation and who are determined to make the necessary investment in rail too.

Lynda Waltho: My right hon. Friend will know that the extension of the highly successful, reliable and climate-friendly Midland Metro from Birmingham to Brierly Hill in the black country is long overdue. I believe that we are due a ministerial visit next month to look at the route. My sons have gone from toddlers to teenagers waiting for this project. Will the Minister give the go-ahead before they make me a grandmother?

Rosie Winterton: Naturally, I am beside myself with excitement about my visit to my hon. Friend's constituency, which I believe is in approximately six weeks. I am counting the days. She will know that the regional funding allocation process through which the extension would go has not at this point prioritised the extension of the Metro. Those involved are looking at these issues on each occasion that they examine the priorities, and I very much look forward to learning more about the extension when I come to visit her constituency.

Laurence Robertson: Bus services in rural areas are more expensive to run. Sometimes the buses are not necessarily full, but they are very important services. Do the Government take into account the fact that they are more expensive to run when calculating the grants that they give, for example for subsidised bus passes? The situation is important in my constituency in Tewkesbury, where some services are being cut because the councils claim that they are not getting enough money to run them.

Rosie Winterton: The hon. Gentleman may be aware that this Government introduced the rural bus subsidy grant, which has played an important part in sustaining rural bus services. Again I must return to the Local Transport Bill, which will give local councils greater powers to work with operators to run services. It will also introduce improvements in community transport, and that is particularly relevant to rural areas. I therefore urge the hon. Gentleman to encourage his Front-Bench colleagues to support the Bill as, until now, they have failed to do so.

David Wright: The Department for Transport estimates that there are around 1.2 million vehicles without a valid MOT certificate. Is it not time to bring in a system of reminders for people, so that we can ensure that we improve the quality of vehicles on our roads?

Jim Fitzpatrick: My hon. Friend raises a very relevant point. On top of the 1 million vehicles without an MOT certificate, I understand that the certificates for some 4 million vehicles are renewed up to four weeks after they should be. A problem clearly exists, therefore, although owners can use a peel-off part of the certificate to remind themselves about when renewal falls due. Many garages and MOT testers send out renewal reminders, but we have asked the Driver and Vehicle Licensing Agency to look at other methods that we can use. Obviously, as there are 31 million vehicles in this country, it would be very expensive to send out reminders to all owners, but we are looking for better ways to remind people about when their MOT is due.

Angus MacNeil: A shop steward in the PCS union has sent me an e-mail to inform me that the Maritime and Coastguard Agency's own figures show that coastguards saved 48,000 lives last year. That equates to many billions of pounds saved for the economy, so what are the Government doing to help resolve the current dispute with our coastguards?

Jim Fitzpatrick: The dispute with the coastguards is obviously regrettable. Safety is of paramount importance, and the Government are doing everything possible to make sure that emergency services are provided while MCA members take strike action. They believe that that is the best way to prosecute their pay claim, but we consider that the settlement that they received last year and this year was appropriate and in line with Government recommendations. We are offering talks on a multi-year pay deal for the future, but at present we are making sure that the contingency plans needed for the safety of mariners are in place.

Angela Smith: The case for the reopening of the Woodhead line across the Pennines has been made many times in this Chamber, as it would enhance the north's economic development. Will my hon. Friend the Minister of State update the House on the discussions between the Government and representatives of the National Grid and Network Rail about the preservation of the third Woodhead tunnel—called the "53 tunnel" because it was built in 1953—for future use?

Rosie Winterton: As promised, I met representatives of both Network Rail and National Grid last Friday. We discussed the issues arising from the Adjournment debate to which my hon. Friend and many other hon. Members contributed. Both companies agreed to study the feasibility of ensuring, when the Woodhead tunnels are sealed, that access for the purposes of ongoing inspection is retained. In addition, I discussed Network Rail's utilisation strategy for the future use of the rail network by both freight and passenger services. The company agreed to take into account any representations about the future use of the Woodhead tunnel for freight.

Road Traffic (Safety)

James Brokenshire: I beg to move,
	That leave be given to bring in a Bill to make provision about the content of driving tests; to create offences relating to dangerous driving; and for connected purposes.
	In introducing this Bill, I wish to make specific acknowledgment of the work of the children and young people's think tank "Kids Count", and of the "Drive to Survive" campaign. I also want to recognise the work of Inspector Toby Day of Leicestershire police and of the all-party parliamentary group on child and youth crime. I want to thank all of them for their assistance on the matters that I am bringing before the House this afternoon.
	In 2006, the last year for which figures are available, 3,200 drivers, passengers and pedestrians lost their lives as a result of road accidents, but no figures, numbers and statistics can convey the underlying tragedy of each case—the loss of friends, family members and loved ones whose lives have been cut short, and the lifelong impact on those left behind. The headline figures mask some disturbing trends and patterns of behaviour. Although the total number of fatalities has decreased over the past five years, the number of fatalities among young drivers under 25 has gone up from 537 to 606—an increase of 13 per cent. The number of young drivers under the age of 25 convicted of driving while intoxicated due to drink or drugs also increased in that period.
	There is also the serious issue of deaths arising from high-speed chases. In 2006-07, some 155 people were killed or seriously injured as a result of road traffic collisions on public roads during emergency responses and police pursuits. Some of the recent headlines say it all. A police officer was injured after his patrol car collided with a stolen caravan during a chase on the M6, a woman was killed and four people taken to hospital when a car collided with a Mercedes that was fleeing police in east London, and friends of a teenager who died in a car that crashed after it was involved in a police pursuit have been paying tribute to him ahead of his funeral. At the end of last year the Independent Police Complaints Commission published its two-year review of road traffic incidents involving police vehicles that resulted in a fatality or serious injury. It made 29 recommendations about how police practice could and should be changed.
	More should be done to reduce the number of deaths and injuries arising from accidents involving young drivers and pursuits. That will partly involve prevention through demonstrating, and bringing home very clearly, the reality of being involved in a serious car accident. I was moved by a recent presentation organised by Drive Survive, a multi-agency partnership based in Cheshire. Partners involved in the project and the presentations that Drive Survive offer include the police, the fire brigade, the Highways Agency, the ambulance service and hospital accident and emergency services. By dramatically highlighting the consequences of inappropriate driving and vehicle control, Drive Survive seeks to educate young people aged between 16 and 25 of the risks involved in driving dangerously or recklessly, and to prevent serious injury or worse.
	Having sat through part of the presentation, I can confirm that the content is deliberately graphic and hard-hitting. It shows real-life images of accident scenes and direct testimony from those who do an amazing job in responding to emergency call-outs. Most importantly, it includes personal accounts from families affected by the loss of a relative in a car crash. The project has received very positive feedback from local colleges and other stakeholders, who testify to the impact that it has had. I believe that such education, understanding and recognition of the consequences of dangerous driving could have a wider impact and could start to change attitudes, altering the approach of young, normally male, drivers who think that it is impressive or the right thing to do to try to show off to their mates about the limits of what their cars can do, or indeed of what they can do behind the wheel of a car.
	My Bill would amend the Road Traffic Act 1988 by including a specific reference in the driving test to the impact of being involved in an accident involving a motor vehicle, and in relation to the powers of the Secretary of State and local authorities to provide road safety information and training. I believe that that small change to the law would assist, encourage and facilitate a national programme to temper the behaviour of young drivers through hard-hitting education and training programmes focused on the reality of driving dangerously. By providing such a real-life context as part of the theory exam in the current driving test, it will make the test more relevant and emphasise other existing safety aspects of the theory requirements.
	This approach is intended to build on the current Arrive Alive road safety programme conducted by the Driving Standards Agency, and to extend the concepts of what happens when an accident occurs—the types of injuries sustained, the likelihood of survival, and so on—so that they form an important part of the preparation for learning to drive.
	The second part of my proposals addresses the legal sanctions available in circumstances where there is a pursuit. To date the focus has been on dealing with the effects of pursuits, instead of the cause. Pursuits are inherently dangerous and are difficult to manage and contain operationally. If drivers did not make off from the police, there would be no reason to pursue them.
	The instant that drivers decide to accelerate away from police vehicles to avoid capture, for whatever reason, they make the decision to enter an extremely high-risk arena where a number of lives, including their own, are put at risk. Many of them have driven vehicles at horrendous speeds along public roads for up to an hour before they are stopped, and are prepared to take any steps to evade arrest, yet even when they are caught, most walk away with little or no punishment.
	A number of pursuits occur when offenders choose to make an escape having committed relatively minor offences. Research has shown that the main reason why offenders flee in a vehicle is that they are not deterred by the low level of punishment that they perceive will result from their actions. Some reports indicate that the prospect of a custodial sentence would cause offenders to abandon their vehicle at an early stage and make off on foot. Although current sentencing guidelines for the offence of dangerous driving allow for evading arrest to be taken into account, this approach is not acting as a deterrent, and in my judgment is not working well in practice.
	My Bill would therefore create a new offence aimed at someone refusing to stop when requested by a police officer and then engaging in sustained and extreme dangerous driving. It would achieve this by creating an aggravated driving offence punishable by an unlimited fine, mandatory disqualification and up to three years' imprisonment. A key part of the new offence is that it would require intent; in other words, where someone is asked to stop, knowingly fails to do so and then drives dangerously, an offence would be committed.
	This approach has the support of the Association of Chief Police Officers and the Police Federation. Too many lives continue to be lost on our roads. We need to cut the annual death toll. The measures that I have outlined are practical, proportionate and deliverable. They can play an important part in changing the mindset behind the wheel, and in so doing, reduce the number of individual tragedies that so many of us see in our constituency surgeries each week. I commend them to the House.
	 Question put and agreed to.
	Bill ordered to be brought in by James Brokenshire, Mike Penning, Mr. John Leech, Mr. Stewart Jackson, Mr. Lee Scott and David T.C. Davies.

Road Traffic (Safety)

James Brokenshire accordingly presented a Bill to make provision about the content of driving tests; to create offences relating to dangerous driving; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 20 June, and to be printed [Bill 98].

Orders of the Day

Pensions Bill

As amended in the Public Bill Committee, to be considered.

New Clause 17
	 — 
	Crown employment

'(1) This Part has effect in relation to employment by or under the Crown as it has effect in relation to other employment.
	(2) For the purposes of the application of the provisions of this Part in accordance with subsection (1)—
	(a) references to a worker are to be construed as references to a person employed by or under the Crown;
	(b) references to a worker's contract are to be construed as references to the terms of employment of a person employed by or under the Crown.
	(3) This section does not impose criminal liability on the Crown.
	(4) But on the application of the Pensions Regulator the High Court or the Court of Session may declare unlawful a failure by the Crown to comply with any of the duties mentioned in section 40(1).'.— [Mr. Mike O'Brien.]
	 Brought up, and read the First time.

Mike O'Brien: I beg to move, That the clause be read a Second time.

Mr. Speaker: With this it will be convenient to discuss the following:
	Government new clause 18— Armed forces.
	Government new clause 19— Police.
	Government amendments Nos. 35 and 36.

Mike O'Brien: It is a pleasure to join hon. Members to debate the Bill on Report. The Bill has been marked by a considerable degree of consensus not only among parties in the House, but among those outside the House, who have contributed enormously.
	This group of new clauses and amendments relates to the application of the employer duties established by this Bill. Three groups require special provision—the Crown, the armed forces and the police. New clause 17 brings the Crown sovereign and executive within the scope of the employer duty. As a result, workers employed by the Crown will have the same opportunities as other workers to save for retirement under the reforms. Of course, I reassure the House that, in accordance with long-established principles of constitutional law, the Crown will not be exposed to criminal sanctions. Instead, this amended provision enables the regulator to apply to the High Court or to the Court of Session for a failure by the Crown to comply with duties set out in clause 40(1) to be declared unlawful. That follows the approach adopted for most modern employment legislation.
	As trailed in Committee, new clause 18 excludes the armed forces and the reserve forces from the reforms set out in the Bill. It also excludes cadet force adult volunteers from the scope of the reforms. Members of the armed forces have a special position in law. They are subject to service law rather than general employment law, except in specific circumstances relating to discrimination in relation to race and sex, but not to age or disability. For that reason, and in view of the 100 per cent. take-up of pension saving by the regular forces, the Government consider it appropriate to exclude the armed forces from the reforms. Members of the regular armed forces are automatically enrolled in non-contributory pension schemes, and the Ministry of Defence has no record of anyone opting out: there isn't a problem, so let's not mess with it. Of course, references to the armed forces in pensionable service include not only regular forces, but those undertaking certain forms of service while mobilised or undertaking full-time reserve service.

Nigel Waterson: Will the Minister confirm that the existing system for members of the armed forces would deliver a pension at least as generous as that envisaged under the personal accounts system?

Mike O'Brien: Obviously, how much someone gets depends on the length of time for which they contribute and the pot that they build up, so there is not a straight answer to that question. I will ask my officials to consider the balance, because many soldiers will serve for less time than many employees will have to build up a pension pot in regular, non-military employment. I will examine the figures carefully and write to the hon. Gentleman, who has asked a reasonable question.
	Reservists may accrue benefit under the reserve forces pension scheme, if they enter full-time reserve service. That is also one of the options available to mobilised reservists. Another option is remaining with their existing pension scheme—their employer scheme—in which case the Ministry of Defence would pay the employer contribution. Separately, cadet force adult volunteers offer their time without receiving a wage or pension contributions. Although they may receive occasional remuneration for training, this clause makes it clear there will be no access to pension saving.
	Finally, new clause 19 brings members of the constabulary and police cadet forces of Great Britain within the scope of the reforms. It is necessary, because some police officers are "office holders" and do not therefore routinely fall within the definition of "employee" or "worker". Accordingly, those members who are not employed under an employment or worker's contract are included by being treated as workers. We include constables and trainees appointed by the chief officer of police as "police cadets". Police officers in a Home Office or Scottish force become members of the police pension scheme. The great majority are members of the 1987 scheme, but since April 2006 entrants have become members of the new police pension scheme 2006. Both schemes are defined-benefit pension schemes.
	The officers' contribution rate for each scheme is relatively high. Although we think that it provides good value for money, it can and does cause a very small number of officers to opt out, particularly during early years of service when earnings are lower. The new clause will ensure that any officer who opts out of the police pension scheme will receive the same protection as others in employment—that the employer retains the duty to seek to re-enrol non-participating officers at key intervals during their work with the police, to nudge job holders into reconsidering an earlier decision; I was about to say "employment" with the police, but of course the very point is that it is not employment.

John Butterfill: Will the hon. and learned Gentleman confirm that, as far as death-in-service benefits are concerned, there will not be change in any of those categories?

Mike O'Brien: There is no plan for any change. I hesitate only for this reason: I have been in discussions with the Home Office about a particular change that will result in payments being made to the parents of police officers who die in service. I have had a particular case in my constituency, so I hesitate slightly on the issue. However, there is no intention that the rules and regulations that I have been discussing should change that provision. If it was changed, that would happen through police regulations, not as part of anything in the Bill.

John Penrose: rose—

John Butterfill: rose—

Mike O'Brien: May I ask the hon. Member for Weston-super-Mare (John Penrose) to pause a moment? The hon. Member for Bournemouth, West (Sir John Butterfill) wants to come back on my point, and I am happy for him to do so.

John Butterfill: I was thinking of each of the categories, including service personnel. Will there be no change?

Mike O'Brien: There will not be change as part of these provisions in the Bill. Such issues would be dealt with separately by specific regulations or legislation relating to the armed forces or the police.

John Penrose: I have a question on a separate issue, although it is related to the points that the hon. and learned Gentleman has just made. He is describing particular sections of the public sector work force that will be excluded from the Bill's provisions. Yet further on in the Bill, as the Minister will obviously know, a procedure is laid out for occupational schemes to exempt themselves from applying personal accounts because they already have in place occupational schemes of satisfactory quality. Why have the Government decided to take a different route for these public sector employees by making them specifically exempt in the Bill, rather than just allowing them to follow that exemption procedure, as private sector firms will be required to do?

Mike O'Brien: I would give a comprehensive answer to the hon. Gentleman, but that would take an awfully long time. I am afraid that there have been lengthy negotiations with the armed forces, for example, about whether they wanted to be included or not. The Ministry of Defence has had various discussions with us at different stages. Our original view was that it would be better for the armed forces to be in, but now we have taken the view that they want to be out. In respect of the long-term impact, I should say that all the armed forces sign up to the pension scheme anyway. That scheme works very well and we do not want to mess with it. If the MOD wants this exemption, I am happy to go along with that. Broadly, I try to deal with the issues raised in relation to the Bill by looking at them on their merits. Over a period, we have seen that the views of some of the stakeholders have changed. That is the case with the armed forces, and I am happy with the position that we have now got to.
	With the police, there was the issue about the definition and whether they were workers or not, and we have taken the view reflected in the new clause.

John Penrose: I thank the Minister for that reply. I suppose that the underlying concern behind my question is that many private sector firms are worried that the process for opting out is over-complicated, and some would like it to be simplified. I completely applaud the Minister's reasons for why one would want to exempt the groups that he has just described. However, if an exemption is given to public sector firms through a different mechanism, the private sector people concerned about that extra complexity will be worried that they are not being treated fairly, and that there is not a level playing field.

Mike O'Brien: Early in the consideration of the Bill I picked up some concerns from employers about the complexity of the provision to exempt them from having to enrol in this form of personal accounts. We kept it very simple. Essentially, they must have a provision that matches personal accounts and makes a minimum 3 per cent. employer contribution, with a 4 per cent. contribution from the employee. The exemption is very straightforward, and they should be able to identify whether they may be exempt. Certainly, the pension providers who provide the pension to employers should be able to say immediately whether their scheme is exempt. It will not apply to some schemes because the contribution levels are too low, and we have been clear that we want to increase those contribution levels where that is the case.
	By and large, I have not picked up any recent concerns. The CBI, the Federation of Small Businesses and others have been broadly supportive of the way in which we have undertaken this. The hon. Member for Weston-super-Mare seems to be flashing some document at me. If it is from an organisation, I have met most of the organisations concerned and we have had broad support for the Bill as a whole, although there are specific concerns. We have tried to keep the issue of exemption as simple and straightforward as possible. We are conscious that the Bill will apply to small-scale employers such as the chippie down the road or the hairdresser round the corner, who may employ just a couple of people, and we wanted to ensure that the provisions were not so complex that they would have to do an awful lot of reading or examination of the issues. Concerns have been expressed to me about one problem that we will no doubt come to later on—how earnings are calculated. That can get quite complicated, but we are looking into technology to try to deal with that for some of the smaller-scale employers.
	These specific exemptions are included in the Bill primarily because they deal with public sector employees who have their own particular provisions. On that basis, they are justified and I hope that the House will support them.

Michael Penning: May I take the Minister back a few moments, to when we were discussing the armed forces? I fully appreciate that most members of the armed forces would not wish to opt out, least of all those who serve 22 years-plus. However, there is a group of people who leave the armed forces early and wish to transfer their rights into another scheme. For instance, when I left the armed forces—the Grenadier Guards—I transferred my rights into the fire service. I appreciate that the Minister may not be able to answer me now, but this is a very important issue for those of our armed forces who are not going to serve for 22 years but have a pension provision to take with them. Will any parts of the Bill affect their right to transfer into other schemes?

Mike O'Brien: To some extent, but it would not affect the sort of situation that the hon. Gentleman identifies with people transferring from the armed forces into the fire service. Because there are restrictions on the amount that can be transferred into personal accounts, the person concerned would not be able simply to transfer in a certain amount. One of the approaches that we have taken is to say that there is no transfer in and no transfer out of personal accounts, so amounts are not transferred in in that way. Many employers who currently have pension schemes will continue with those schemes. The personal accounts scheme is there as a default scheme for employers who do not have an adequate occupational pension scheme. Our intention is that employers who already have good-quality occupational pension schemes should continue with those schemes.

Michael Penning: rose—

Mike O'Brien: I will give way, although I am anxious to make some progress.

Michael Penning: The point that I was trying to make is that there are tiny amounts frozen within the armed forces schemes, which are useless in the long term as regards when people will get their pensions, but would be useful if they could be transferred into the personal accounts scheme.

Mike O'Brien: I have a considerable degree of sympathy with that point. As part of the process of developing a consensus, we arrived at the "no transfers in and no transfers out" rule. However, I have repeatedly been told that some employees, including members of the armed forces, have quite small pension pots and that leaving them there is a hassle, so getting them into personal accounts or another scheme would be a better way.
	However, some of the providers of pensions, and particularly insurance-based products, have concerns about the provisions that allow transfers in, even of small pension pots. We have said that at the start, transfers will not be allowed into personal accounts. However, we will review the situation in 2015, with a view to ensuring that we look at the matter again. My personal view, which is not reflected in the Bill because it is not part of the consensus, and we have reached an agreement, is that it should be possible to transfer in small pension pots, because it will just be a hassle if that cannot happen. There is no such provision in this Bill, but there will be a review in due course, and at that point, I hope that the practice will be allowed.

John Redwood: If the Crown were found by a court to have behaved unlawfully under new clause 17, what redress and disciplinary action could and should follow from such a finding?

Mike O'Brien: The court would then have to determine what it was able to do, under the provisions relating to various immunities and so on, and what redress there would be. That would be a matter for the court to determine. Obviously, such redresses are limited.
	I commend the new clause to the House.

Nigel Waterson: I begin by echoing the Minister's opening remarks. I thank all members of the Committee—some of whom have retained their enthusiasm for the Bill, while others clearly have not—the officials, Clerks and everyone else involved. I pay particular tribute to my hon. Friend the Member for South-West Bedfordshire (Andrew Selous), who sadly cannot be with us today because of ill health. He made a signal contribution in Committee, and as a former officer in the Territorial Army, he did so in particular on the provisions concerning the armed forces and reservists.
	New clause 17 seems fairly clear to me; I suppose it might be called the "Backstairs Billy" new clause, dealing with those employed directly by the Queen or members of the royal family. Sadly, Backstairs Billy is no longer with us, so he will not be able to benefit from the provision. It is right that the Crown's direct employees are swept into this provision. My right hon. Friend the Member for Wokingham (Mr. Redwood) made a point about enforcement a moment ago; as I understand it, the best that the Pensions Regulator can do is apply to the courts for a declaration that the Crown has failed to comply with any of the duties set out in clause 40(1), which concerns the enrolling of employees into the system of personal accounts. There is no criminal liability at all. I believe that the matter is based on legislation concerning the working time directive. I guess that we will just have to rely on the sovereign doing the decent thing when such a declaration is made.
	The important issue of reservists was raised in Committee by my hon. Friend the Member for South-West Bedfordshire, who felt quite strongly that the distinction between regulars and Territorials has been eroded in recent years. Many Territorials spend a great deal of time on active service in Iraq, Afghanistan or wherever, and therefore they should not be treated any differently from regular members of the armed forces. It was helpful to hear both what the Minister said and what he set out in the letter he wrote to the Committee in February, in which he made clear that reservists can accrue their own benefits under the reserve forces pension scheme.
	The Territorial Army, in particular, is a component part of the reserve forces and there is pension provision for reservists who are mobilised or who enter into commitments that require regular attendance under the Reserve Forces Act 1996. However, I remain keen to hear from the Minister about the level of contribution, as well as about the level of likely pension benefit for regular members of the armed forces who have what I assume is, in all essentials, a non-contributory defined- benefit scheme. It is important to see not only what the likely benefits will be over a given period, but what contribution the taxpayer will make.
	I am sure that the Minister would agree that, broadly speaking, the benefits obtainable under that scheme should be at least as good as those that would be available under personal accounts, albeit without the contribution from the employee, in this case a member of the armed forces. I suspect that if there is any inadequacy in that comparison our colleagues in the Lords will wish to come back to the issue at some stage. Broadly speaking, however, we have no difficulty at all with the new clauses or the amendments in the group and would be happy to see them in the Bill.

Michael Penning: I should like to delay the House briefly to comment on what the Minister said. I understand that he has reached a consensus on people opting in or out of the provisions in the Bill and that he feels it difficult to move from that until 2015. However, the armed forces are an exceptional group of people, the vast majority of whom do not serve their full 22 years—or these days up to 30 years. When welcoming members of the armed forces from my constituency back from Afghanistan, I met someone who has just agreed to do another five years after serving for 22 years and who even hopes to do another five after that, making 32 years' service in the armed forces. However, that is quite rare. The vast majority of men and women in our armed forces serve for between three and five years. The amount of money in the pension pots that they accrue is minuscule. The administrative costs on the state—in this case on the MOD—of running those schemes from within, rather than their being opted out of, into another Government scheme that could be administered separately, are huge as a proportion of the benefits of the scheme.
	I would like the Minister to look into the issue again and to reconsider that exceptional group of people earlier than 2015, to see whether he could reach a consensus among the members of the other groups with which he has been dealing. I am sure that they would understand that our armed forces are particularly affected. There could be groups of people who have served for short periods in the armed forces—perhaps they served only in training, but were injured through no fault of their own and had to leave the armed forces. It seems ludicrous that there should be a tiny pot that will sit until they are 60 years old, but which could be brought into such schemes quite easily.

Mike O'Brien: First, to respond to the point that the hon. Member for Eastbourne (Mr. Waterson) made, the level of contribution will vary according to the rank and, I would imagine, the length of service of the various individuals.

Michael Penning: indicated assent.

Mike O'Brien: I am getting nods from those who have served in the armed forces and are better informed. However, I will write to the hon. Member for Eastbourne on levels of contribution.
	The hon. Member for Hemel Hempstead (Mike Penning) made his point well and I have sympathy for him. That point came up during our evidence sessions in Committee and we heard various views on it. The concern among some stakeholders is that there will be a transfer into personal accounts of a significant number of pension schemes, which some of those running such schemes are concerned might lead to what is called a levelling down of the quality of provision. To avoid that, we have said that that should not happen at the start. That provision will run on, and we will look into it when we hold the review.
	The process will start in 2012 and the review will happen not long afterwards. In any event, there will be a three-year running-in phase. Reaching the compromise involves precisely the problem that the hon. Gentleman has identified; I do not dispute anything that he has said. Some people will end up with very small pension pots not being transferred in, although it would be better to do so. However, this is part of getting broad consensus and support and, although it is not what we might otherwise have wanted, it is a price worth paying to get everyone to sign up to agreeing that this is the right way to proceed. I understand the hon. Gentleman's point. Indeed, it was discussed in Committee. Having said that I sympathise with him even though I cannot deliver exactly what he wants, I hope that he will none the less offer his support to the new clause.
	 Question put and agreed to.
	 Clause read a Second time, and added to the Bill.

New Clause 18
	 — 
	Armed Forces

'(1) A person serving as a member of the naval, military or air forces of the Crown is not, by virtue of that service, a worker for the purposes of this Part.
	(2) A member of any of the forces specified in subsection (3) who assists the activities of any of those forces is not, by virtue of anything done in assisting those activities, a worker for the purposes of this Part.
	(3) The forces are—
	(a) the Combined Cadet Force;
	(b) the Sea Cadet Corps;
	(c) the Army Cadet Force;
	(d) the Air Training Corps.' . —[Mr. Mike O'Brien.]
	 Brought up, read the First and Second time, and added to the Bill.

New Clause 19
	 — 
	Police

'(1) This Part has effect in relation to a person who—
	(a) holds the office of constable or an appointment as a police cadet, and
	(b) does not hold that office or appointment under a contract of employment, as if the person were employed by the relevant police authority under a worker's contract.
	(2) A police authority that maintains a police force is the relevant police authority—
	(a) in relation to a constable, if the constable is a member of that police force;
	(b) in relation to a police cadet, if the cadet is undergoing training with a view to becoming a member of that police force.'. —[Mr. Mike O'Brien.]
	 Brought up, read the First and Second time, and added to the Bill.

New Clause 1
	 — 
	Start date of personal accounts

'The pension scheme established by the Secretary of State under section 58 of this Act shall commence operation with effect from 1st April 2012.'.— [Mr. Waterson.]
	 Brought up, and read the First time.

Nigel Waterson: I beg to move, That the clause be read a Second time.

Mr. Speaker: With this it will be convenient to discuss the following:
	New clause 3— Costs incurred by Pensions Regulator-
	'The set-up costs incurred by the Pensions Regulator in carrying out its duties under Chapter 1 of this Act shall be funded from the Consolidated Fund.'.
	New clause 4— Costs incurred by Personal Accounts Delivery Authority-
	'The set-up costs incurred by the Personal Accounts Delivery Authority in carrying out its duties under section 58 of this Act shall be recouped through charges to members over a period of five years from 1st April 2012.'.
	New clause 5— Financial assistance to Personal Accounts Delivery Authority-
	'Any financial assistance given to the Personal Accounts Delivery Authority by the Secretary of State must include conditions about repayment and interest at commercial rates.'.
	Amendment No. 15, in clause 66, page 33, line 7, leave out paragraph (b).
	Amendment No. 16, page 33, line 9, leave out subsection (4).
	Amendment No. 9, in clause 69, page 34, line 11, at end insert—
	'(3A) The Authority must within 12 months of the passing of this Act, and at such other time as the Secretary of State directs, publish a report analysing the potential impact on the financial position of a scheme under section 50(1) of different rates of—
	(a) take-up of,
	(b) persistency in, and
	(c) contributions to
	the scheme, and setting out appropriate options for managing the financial risks associated with different outcomes.
	(3B) In preparing the report under subsection (3A) the Authority must have regard to such independent actuarial advice as it considers appropriate.'.
	Amendment No. 13, in clause 70, page 34, line 31, at end insert—
	'and initially based on an annual management charge of no more than 0.3 per cent. per annum.'.
	Amendment No. 27, in clause 72, page 35, line 13, leave out 'grants'.
	Amendment No. 28, page 35, line 15, leave out from '(which' to end of line 16 and insert—
	'shall include conditions about repayment and interest at commercial rates.'.
	Amendment No. 14, page 35, line 16, at end insert—
	'(3) For the avoidance of doubt, all the costs incurred by the Authority in establishing the pension scheme under section 58 of the Pensions Act 2008 (c. ) shall be recouped through charges to members over a period of five years from 2012.'.
	Amendment No. 10, in schedule 1, page 62, line 11, leave out 'grants'.
	Amendment No. 11, page 62, line 12, leave out from 'which' to end of line 13 and insert—
	'shall include conditions about repayment and interest at commercial rates.'.
	Amendment No. 12, page 62, line 14, leave out from 'may' and insert 'is required to make'.

Nigel Waterson: It is a great pleasure to commend to the House new clause 1 and the associated new clauses and amendments in this group. This group falls neatly into two distinct categories, and it is important for hon. Members to understand that there are two major issues involved. One is the commencement of the personal accounts system. The second is what was referred to in Committee as the level playing field issue, namely the extent to which personal accounts will or will not compete on equal terms with existing alternative pension provisions.
	For once, I can say with hand on heart that there is no shadow of a doubt about the Government's policy. It is that the new system should commence in 2012. Of course, even that is a couple of years late, because the Turner commission originally foreshadowed personal accounts as a new system to be set up in 2010. None the less, the Government have made it abundantly clear—as did the Minister in Committee—that 2012 was to be the start date, and that continues to be the Government's firm intention.
	We might therefore wonder why a similarly worded amendment in Committee did not find favour with Ministers. New clause 1 is pretty simple in its drafting, and all that it seeks to do is to ensure that personal accounts established
	"under section 58 of this Act shall commence operation with effect from 1st April 2012."
	If it is to be that year, that seems to be the logical date to start. If we investigate a little more closely, however, we find that there is some doubt as to whether that date will be the due date.
	We had a lengthy debate in Committee, following the interview given by the chief executive of the Personal Accounts Delivery Authority, Mr. Tim Jones, with Mr. Paul Lewis of "Money Box" in December. In that interview, Mr. Jones hinted for the first time at the possibility that personal accounts would not be ready in time. Paul Lewis asked him the rather direct question:
	"This scheme is scheduled to start in April 2012, just over four years away. Is that a realistic target?"
	Mr. Jones said:
	"The honest answer is I do not know yet."
	When put to him later that it might be another date in the future, he said:
	"There is that possibility, yeah, and that's the purpose of bringing somebody like me from the private sector in to look at what is a realistic balance of the desire to get started as quickly as reasonably possible with the need to manage risks to make sure this starts with quality when it starts."
	On the Opposition side of the House, not least because Conservative Members have some slight ambitions that we might be in the driving seat in 2012, we accept, of course, that a bungled launch of personal accounts would not be ideal, but the prospect of the start date being postponed is almost as difficult to contemplate. The Secretary of State, who is sadly no longer in his place, made a rather good speech a while ago about the sort of planning blight that affects people's saving for their retirement; they may have read that something is going to happen in 2012, which might be taken as a reason for not doing something now. On any view, a gap of several years, which can never be redeemed, for some people who could and should be saving for their retirement, is unfortunate.
	One particularly interesting thing that emerged from Committee debates was that a review was going on, as Mr. Jones accepted in the Radio 4 interview. Having been brought into the new job, he was carrying out a review, as we would expect, of how practical all this would be. There was some to-ing and fro-ing between the Minister and myself about whether Mr. Jones would produce a report at the end of the process. We know that PADA currently employs some 100 different consultants, presumably trying to get the right answers to these questions, but there seemed to be some doubt—at least in the Minister's mind—as to whether, by the end of these deliberations, Mr. Jones would actually produce a report on how likely it was that personal accounts would be up and running in 2012.
	I say in passing that it was my first experience of a Public Bill Committee taking oral evidence, and I thought that it was an extremely helpful procedure—certainly in respect of this Bill. That view was held generally by members of the Committee of all political parties. When I asked Mr. Jones in the Public Bill Committee
	"Will this new scheme be up and running in 2012, or is there a plan B?"
	he replied:
	"The policy intention"—
	which I assume is a polite way of expressing a distance between himself and Ministers,
	"is that the personal accounts scheme will launch in 2012, and it is my job, and the delivery authority's job, to meet that intention. We have no evidence at this stage that that is unachievable." ——[Official Report, Pensions Public Bill Committee, 15 January 2008; c. 7, Q11.]
	That is hardly the most ringing endorsement of how likely it is to be ready. We ended up having a Division in Committee simply because the Minister was unwilling to bring himself to agree to let us have a copy of any report that he received from Mr. Jones on the matter.
	Having reflected on the issue since, I still take the view that it is inconceivable that Mr. Jones, in view of his meticulous nature and experience in these matters, will not produce a pretty hefty report for somebody—presumably his chairman and/or Ministers—at the end of the review process. We are simply saying, as part of the general air of amity and consensus that has been evident throughout most of the Bill's passage so far, that we should be privy to those conclusions. We all have a problem if there are real, practical difficulties—with IT or other systems or for any other reason—in delivering the project on time. None of us should underestimate the significance or the size of the challenge facing Mr. Jones and his team. I am quite sure that, because of his past experience, he is up to the job, but that is really why we wanted the matter out in the open on Report.

John Redwood: Is my hon. Friend a little worried that if a Conservative Government were not elected until May 2010 and inherited a mess or confusion, it would be very difficult to introduce the scheme in time if we legislate in this way?

Nigel Waterson: My right hon. Friend has put his finger on the nub of the problem. It would be extremely unfair on an incoming Pensions Minister, whoever it might be, to find at the top of his in-tray or in his first red box a report, already some months or years old, saying "We're sorry, mate, this can't happen in 2012." It is overwhelmingly important to all of us for whom personal accounts are the only game in town to know almost as quickly as Ministers if there is a problem, and how it can be fixed.
	The other new clauses and amendments in this group are largely self-explanatory, so I will not go through them in enormous detail. The central issue is that of the level playing field. It has always been an absolute principle—in fairness, for the Government as well—that apart from some seedcorn for PADA to set itself up and perform its initial task, the personal accounts system should wash its own face in financial terms. The costs should be recovered not from the taxpayer but from the scheme itself and its members, possibly over a period of years.
	What worried us in Committee was loose wording in the Bill about grants, advances and loans from the Treasury to PADA and, perhaps, its successor body, and the lack of provision for a commercial rate of interest or terms for repayment. We firmly believe that a clear line must be drawn between the set-up costs envisaged not in this Bill but in its predecessor, the Pensions Act 2007. If I remember rightly, that Act provided for an initial £21 million for PADA to set itself up and get organised. If more funds are needed thereafter, either the issue must return to the House or the scheme must pay its own way when it is up and running.
	Ministers are able to give evidence to Committees as well, which is great. In his evidence to our Committee, this Minister said:
	"Indeed, it is the role of the members to pay for the operation of that pension scheme",
	by which he meant personal accounts. He went on to say:
	"Once we move into the new system, our aim is that it should operate on a self-funding basis."
	When I mentioned the money voted under the 2007 Act, he said:
	"We are not planning to increase it at the moment; it is about £21 million for 2007—08. We will look at what costs PADA will need in the future, and it has an ability to raise funds if it needs to do so." ——[Official Report, Pensions Public Bill Committee, 17 January 2008; c. 113-4, Q138-9.]
	Now let us fast-forward to the Reuters report of 12 March about the spiralling costs of the project. That report states:
	"The government's new 'personal accounts' regime will cost an estimated 2 million pounds to set up, a four-fold increase on an initial budget of 500 million pounds, two sources close to the situation told Reuters... the total cost of... PADA... has mounted as management has gone back to the drawing board."
	I assume that that is a reference to Mr. Jones's review, which I mentioned a few moments ago. One of Reuters's sources is quoted as saying
	"they've got dozens and dozens and dozens of expensive consultants working on nothing other than devising a plan and supporting the passage of a Bill, which is wrapped up in red tape and time-consuming government process.
	In line with that, the costs are rising astronomically. Value for money is the big thing. It's scandalous."
	It then talks about a management team led by chief executive Tim Jones. It says the team
	"started re-planning the work in October when Jones took the reins."
	The final comment from the sources that I wish to quote is as follows:
	"Around 100 consultants are working on the project, earning anything between 800 and 2,500 pounds each per day".
	If that is true, or even partially true, we need to know from the Minister—if not today, then soon—precisely how PADA's costs are developing. What are they projected to be? Have we passed the £21 million figure already? How much will this project cost before it hands over to the board and trustees who will run the operation?

Julie Kirkbride: As my hon. Friend knows, I served on the Public Bill Committee, and I have also been present today, and I have not previously heard the figures he has just announced. I find them shocking and alarming. Given his knowledge of what has been going on, will he speculate on why the original costs envisaged have risen to such enormous sums? Is that just to do with management consultancy fees, or is something much more complicated leaving us in this position, which could undermine the whole purpose of the Bill?

Nigel Waterson: I am grateful to my hon. Friend, and I am delighted to see that she is present today following her sterling service in Committee. The short answer to her question is that I do not know. I hope that the Minister does, however, and that he will share that with the House. Once Report and Third Reading are out of the way, I hope to organise a meeting—which has been envisaged for some time—with Mr. Jones and his chairman, Paul Myners, and perhaps we can get to the bottom of some of this. However, if costs are running at such a level, it can mean only two things. The first of them is that the overall projected costs will be much higher than forecast. It also suggests—unless the consultants are, heaven forfend, not earning their keep—that there are practical problems to do with the time scale for delivery of personal accounts by 2012 about which we are currently ignorant, and I do not think we should remain so for much longer.
	Let me return to the fundamental question. The situation is perfectly plain from what Ministers have said, and also from the impact assessment of the Bill, which states in paragraph 3.80 that
	"in the long run, the personal accounts scheme is intended to be self-financing".
	We all know what John Maynard Keynes said about the meaning of the "long run", but how long is this long run and how much will all this cost?
	I commend this group of amendments to the House, because it tries to pin down the Government and PADA on recouping the costs of set-up over five years, in terms of grants not being made by the Treasury, and in terms of repayment over a set period and on the basis of a commercial rate of interest for any loans advanced to PADA by the Treasury. If the Minister is aware of any such proposals or plans, it will be helpful if he shares them with the House now.

Paul Rowen: I pay tribute to members of the Public Bill Committee—some of them are present—such as the Minister and, in particular, my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), and to the Clerks for their assistance in the preparation of amendments.
	The measures tabled by the hon. Member for Eastbourne (Mr. Waterson) fall into three categories: the timing of the introduction of personal accounts, reporting on that introduction, and costs—what he termed the level playing fields. No one can underestimate the complexity of the introduction of personal accounts. Even the largest occupational pension scheme is unlikely to have more than 10,000 members. However, we are talking about a scheme that could have up to 5 million members and, as the Minister said, that could include the local hairdresser and their staff as well as large companies, so this is a mammoth undertaking. The Government have committed themselves to a commencement date in 2012. It is right that there should be a lead-in period and that an organisation such as PADA has the task of getting things under way.
	We require an answer from the Minister on where we are with the development of the process and we need him to assure us that there will be regular reporting back. Amendment No. 9 would require the production, within 12 months, of a report analysing the financial position, take-up and different options and costs. When introducing something so complex, it is right and proper that we have an undertaking from the Minister that we will be given a regular report on how the scheme is developing.
	We need a response to the point made by the hon. Member for Eastbourne about the Reuters report on costs. When Mr. Jones came to the evidence sessions, we were not given an indication that the costs had escalated so much. It is worrying if costs have rocketed to such an extent at this early stage, so I hope that the Minister will assure us that there will be regular reporting back, as envisaged under amendment No. 9, and that any escalation of costs will be properly reported. I do not underestimate the complexity of the task, but I am concerned that Reuters is reporting such an escalation of costs when we have not even finished considering the Bill.
	On the other proposals tabled by the hon. Member for Eastbourne, I should point out the importance of a level playing field. We all made it abundantly clear in Committee that personal accounts are not to be in competition with existing pension schemes; they are primarily designed for a large section of the community who are not saving for their pension and who will end up in a poor financial position when they are pensioners.
	We thus have a duty and a responsibility to ensure that money contributed by employees and employers, or through a tax rebate from the taxpayer, will not be eaten up in consultants' costs. Although I agree that we should keep an eye on costs, I cannot agree with the hon. Gentleman's proposal that they should be set at 0.3 per cent. right from the start. That should be the long-term objective, but it is probably right and understandable that in the initial years, when the scheme is growing, costs will be greater. For the same reason, I cannot support him when he says that we should restrict the trust's ability to borrow money. If the long-term objective is for the scheme to be self-funding, money will have to be borrowed in the initial stages and then recouped as the fund grows. If that is not done, the people who are contributing at the beginning when the scheme is set up will pay a much higher proportion in respect of what they are putting into the pot than those who are involved later on, which is why it is inflexible to set an upper limit. That might well be a long-term objective, but it will not be achievable to start with. Restricting the ability to borrow money—albeit that it will be expected to be paid back—is not a sensible option.

Nigel Waterson: Presumably the hon. Gentleman accepts the principle that loans should be repayable over an agreed period and subject to commercial rates of interest.

Paul Rowen: I agree entirely, but I have a problem with the provision for repayment within five years, when people might be saving into a personal account for 20 or 30 years, because that would up the cost. We need flexibility, at least in the initial stages.

Nigel Waterson: Does the hon. Gentleman agree, therefore, that the PADA consultation document about the possible different charging structures for personal accounts might well be affected significantly by the cost overrun that we are talking about, because it could affect the pros and cons of an initial charge, an annual management charge, or whatever other option is considered?

Paul Rowen: I agree. It is important that the Minister answers the point about cost overrun and addresses how it will be met. My point was made in response to the totality of the amendments and the fact that the Bill allows grants or loans to be made—or at least provides for some flexibility within the consultation that is taking place. Rather than Parliament imposing a structure on the industry, which is far more expert on such issues than we are, it is important that the industry is allowed to suggest the most cost-effective approach. I accept some of the amendments—the hon. Member for Eastbourne is right to want to ensure that we have a proper understanding of the start date and the costs—but I do not support their overall thrust, which would be too restrictive.

John Penrose: The hon. Gentleman says that it might be appropriate to allow grants or loans to be made, but those two things are very different. He has explained his position on loans clearly, but the implication of grants is that the money given does not have to be repaid. That might cross a boundary in terms of providing unfair subsidy in comparison with other providers of pensions. Did he mean to use both those words, or was it a slip of the tongue?

Paul Rowen: I was about to come to the distinction between grants and loans. There is only one area in which a grant may be appropriate. We had some discussion in Committee about the provision of information and advice, but such advice would be generic, not specific to particular saving. There is an argument for saying that the Government should encourage the provision of generic information and advice, and it might be appropriate for a grant to be made to set that up. It would not be set up to compete with existing provision, nor would it provide information that would allow someone to make a choice between an existing private scheme and personal accounts.

Mike O'Brien: The hon. Gentleman is right. I would also add that because of the nature of personal accounts PADA will give some advice to the Pensions Regulator on how the compliance regime will be set up. Such advice is not something that other, commercial pension schemes would be required to provide.

Paul Rowen: I am grateful to the Minister for that intervention and his point is right. We are setting up a whole new structure that does not have to be in competition with what already exists. It is clearly new, and some aspects will be specific to what personal accounts are trying to do, in which case it is appropriate to have grants.
	I hope that the Minister can answer the concerns raised by the hon. Member for Eastbourne and me about costs and how we will ensure that the date is set. I hope that he can give us some assurances, or a breakdown of how the costs will be recouped as PADA develops its work. Once the consultation is finished, I hope that he will tell us how the chosen model will be used to deliver the funds that the trust will need to deliver the service.

Mike O'Brien: Some of the issues under discussion are complex and important, so I am afraid that it will take me some time to go through them.
	On the start date, our intention has always been that the reports should be introduced in 2012. That has not changed, but, quite naturally, Tim Jones wanted to assure himself that the plans that he inherited as chief executive were deliverable. He has now completed his review. I am afraid that it was not the sort of hefty report that the hon. Member for Eastbourne (Mr. Waterson) may expect, but Tim Jones met me and produced his report bang on time. He now has a credible set of plans that are consistent with starting to deliver the scheme from 2012.
	If the Liberal Democrat spokesmen—both the hon. Member for Rochdale (Paul Rowen) and the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander)—want to meet Tim Jones, he would be delighted to do so. The hon. Member for Eastbourne is probably aware that the hon. Member for Wantage (Mr. Vaizey) has already met Tim Jones to discuss some of the cost issues and some other issues, including those of commercial confidentiality as contracts of a substantial value will be offered to set up the scheme. It is therefore important that the scheme's commercial confidentiality, and therefore its viability, is maintained. For that reason, with due undertakings from the hon. Members concerned, I am sure that Tim Jones will be able to discuss some of the issues in detail, provided that that detail does not cross into the public arena, where it might prejudice the various contracts.
	We are still four years away from the go-live date for a complex programme that delivers ground-breaking reforms. It would be ludicrous to stand here and say that there are not uncertainties, risks or events around the corner that might change how we see things. We must not lose sight of the fact that it is not just Tim Jones, the Pensions Regulator and the Government who need to deliver to make some of the reforms a success. For instance, the date for Royal Assent for the Bill is, to use a Donald Rumsfeldism, an example of a "known unknown". We do not know when the Bill might be delivered. We have made good time in scrutinising it in Committee, but I cannot be sure, even with the best will of the House, of the exact date of Royal Assent. That means that I cannot be sure of the exact date that PADA will get the legal authority that it needs to begin to implement the personal accounts scheme. I anticipate that that will not have much impact on the delivery of the IT or the systems supporting the personal accounts scheme, but we will need to understand the impact on a range of supporting activity, including when we can deliver the information needed by employers and pension schemes so that they have time to prepare.
	There are other unavoidable uncertainties, to use a different phrase. The pension accounts scheme will be unlike any other scheme in that it will be the largest occupational scheme in the UK, with 4 million to 7 million active members, and it will interact with nearly 1 million employers. It will be specifically targeted at a part of the market that, by and large, existing providers find uneconomic to serve. No other scheme has restrictions like a contributions cap, and it will be required to admit anyone eligible to join, irrespective of whether the revenue that they might bring in will cover the cost of their account. So although some of the infrastructure needed will already exist in the market, some of it will need to be developed.
	We have made assumptions about how long the procurement and build processes will take, and they are good and robust assumptions, but we will not know exactly what is involved until PADA has engaged with potential private sector suppliers and found out what they can do and how they will deliver what we need.
	We must also build into our plans the needs of employers, the pensions industry and individuals to ensure that they understand the reforms and can take the necessary steps to be ready for go-live. We have already said that we will bring employers into the reforms in stages and phase in the rate of contributions that they are required to make. We will need to get those aspects of implementation right and ensure that the right employers have the right information at the right time to meet their new duties. We need to avoid a big bang implementation so that the pensions industry, including the personal accounts scheme, and the supporting infrastructure such as advice services for employers and individuals can take on their new roles and responsibilities in a measured and controlled way.
	It would be wrong for me to predict exactly what will happen on an exact date in 2012, but I am confident that that is a realistic start date for the reforms, provided that we get the staging and implementation right. That has been the basis of my conversations with Tim Jones, and I am happy for the hon. Member for Eastbourne to have conversations with him about his plans and the outcome of his review. As I understand it, much of that review is on charts and so on, so there is paperwork. If the hon. Gentleman wishes, he can look at the charts, which show the timing involved and various other things—I had a glance at them, but I rely more on the discussions with Tim Jones than on all those charts, which he drew up for his own purposes.

Jim Cousins: I very much appreciate the points that my hon. Friend the Minister is making, but they leave me with the feeling that the start date of 1 April 2012 for the personal accounts is now surrounded by a certain amount of doubt on practical grounds. Can he assure me that the year of 2012 will not be affected? He will obviously see the implications of that year, which we might come to later.

Mike O'Brien: I do not know quite where my hon. Friend got the date of 1 April from, but 2012 has always been the year in which we have envisaged the scheme starting, and we continue to do so. That is the plan and the proposal, and it is what Tim Jones has been signed up to deliver and designed plans to implement. I acknowledge the hon. Member for Eastbourne's point that the project is very big and has all sorts of implications, and in reply may I say that the plan is to start to deliver in the course of 2012. Let us see, when we get a little closer, what precise month or day in 2012 it will be.
	It has always been envisaged that this will not be a big bang, and that the scheme will be phased in over a three-year period, with employers starting by making 1 per cent. contributions, then making 2 per cent. contributions in the following year and then 3 per cent. contributions. The scheme will not suddenly appear on one day in 2012 and all be in place. It will be a phased-in project. The question is when we are going to start the reforms, and the answer is 2012. That is what we envisage, but I accept some of the hon. Gentleman's points. There will always be issues that we must examine, not least when the Bill finally becomes law, and all of them will have to be factored into the management of any project date. As far as we are concerned, though, Tim Jones has done as we asked and drawn up plans for delivery in 2012. That is when we envisage that the proposals will come into force.
	The second element of this group of amendments and new clauses relates to the funding arrangements for PADA, but first I shall say something about the Reuters story, which appears to derive from something said by a person claiming to have worked as a consultant at PADA for a time. The £500 million figure seems to be based on the Pensions Commission's assumption in respect of the loan needed to set up the scheme, an estimate that preceded two White Papers on pension reform, the Pensions Act 2007 and this Bill. We now know much more about the scheme, but we cannot say exactly how much it will cost until its full design, as well as the procurement of the services underpinning it, has been completed. Moreover, we cannot even begin those processes until this Bill has received Royal Assent.
	This legislation authorises PADA to do the job for which the hon. Member for Eastbourne wants me to provide figures as to cost but, until PADA has started talking to the people who will provide its IT and other infrastructural requirements, it will be very difficult to know the costs involved. In any event, the size of the contracts means that anyone who had a detailed breakdown of the cost figures would be at a considerable commercial advantage. Because of that, I am happy for the hon. Gentleman to talk to Tim Jones, as long as the conversation is in appropriate confidence. We do not want to read about it in the papers afterwards, but I am sure that we can trust him in that regard.

Mark Durkan: My hon. and learned Friend is right to say that it would be wrong to introduce the changes in a big bang on one day, as that would be like asking for a terminal 5 debut for something that is very important to a lot of people. However, some of us are worried that all the other costs being talked about might prevent him from delivering on his promise to consider certain other matters, such as the small number of schemes that are known to fall between the Pension Protection Fund and the financial assistance scheme. Will he assure me that the costs that we have been discussing will not have implications for any decisions made about those few schemes?

Mike O'Brien: I know that my hon. Friend has concerns about those few schemes, involving a limited number of people, which fall between the FAS and PPF schemes because of the dates involved. I hope that we can move to deal with them in the other place, and I am still in discussion with colleagues to that end. I encourage him to retain some hope, but I cannot give him any guarantee. I want to make it explicit that I have still to talk to colleagues about some of these matters, although I assure him that this Bill will not affect the outcome of those talks.

John Penrose: I understand what the Minister has said about commercial confidentiality preventing him from saying too much about costs, but may I press him a little further on the matter? If PADA has done enough detailed work to know that the timings involved can be achieved, at least in theory, it must also have made some estimates of the costs involved. I appreciate that there could be commercial ramifications if we were to go into the detail of those costs, but will he offer the House some reassurances that the total costs being considered are not wildly different from the numbers that have been projected? It is important that the House understands that, because if the numbers are twice or three times as high as those in the projections, to choose a deliberately extreme example, the implications for the long-term overall costs of the scheme will be negative and very serious. Will the Minister at least give us the basic assurance that there are no show-stoppingly large and unexpected figures in the plans that he has seen so far?

Mike O'Brien: The hon. Gentleman is right that there are time scales, and it looks as though they can be delivered on, all other things being equal, by 2012. There are also estimates about various contracts. Again, for the reasons that he gave, I do not want to go into that.
	The hon. Member for Eastbourne is wrong when it comes to the figure of £500 million, which came from the Pensions Commission years ago. That was just an estimate that it made. We have not, at this stage, put forward another, separate figure, but the figure cited is not the figure that we are aware of; however, I cannot go any further than that at this stage, as regards broad figures.

John Penrose: I suppose that the bottom line is that everyone will want reassurance that the Minister has not seen anything to lead him to believe that in the long term we will not be able to reach the target number of basis points of the long-term cost, which the hon. Member for Rochdale (Paul Rowen) mentioned earlier. Has the Minister seen anything that leads him to believe that that is not possible in the long term?

Mike O'Brien: No, I have not seen anything that has led me to think that the charging levels are not achievable. I think that that is what he is asking about, and I have given him the answer as straight as I can.

John Butterfill: Will the Minister give way?

Mike O'Brien: Yes, just once more, and then I will make progress.

John Butterfill: While we are on the subject of costs, may I ask about the transition from PADA to the trustee body, which is not named as yet? What does the Minister think the trigger will be for the transition, and does it have an impact on cost?

Mike O'Brien: If the hon. Gentleman is asking at what point we will make the transition from PADA to the Personal Accounts Board—the delivery authority for the pension scheme—it is envisaged that we will come to that point in 2012. That is when the Personal Accounts Board—the trustee corporation, in effect—will take over and start to deliver a pension scheme. The aim of PADA is to create the mechanism that will deliver the scheme. The Personal Accounts Board, which will control the trustee corporation, will then provide a personal accounts pension scheme. It is envisaged that that will come into effect in 2012. Does that deal with his point?

John Butterfill: Sort of, but my question is: when will we know that we have reached that point? What is the trigger for us saying, "We are now there and can move from one phase to another"?

Mike O'Brien: There will be an overlap. There will not be a sudden cut-off of PADA and then creation of the Personal Accounts Board. There will be a period when the board runs alongside PADA in a shadow process. When PADA goes live—when it starts taking in money and building up a pension scheme—that is when we will know that the handover has in effect taken place. PADA may have to continue to exist for a short period thereafter before being wound up, so that we can ensure that the processes are properly carried out; there may be some advice given to it, and there may be services that it is providing. However, it is envisaged that PADA will start to wind up around 2012. I do not have an end date for it, but it will not go on long after that. It will then hand over completely to the Personal Accounts Board and the trustee corporation, which will run the pension scheme.
	Let me deal with some of the issues in relation to funding. The unique nature of personal accounts will present a challenge in developing a funding strategy. Before any decisions can be taken, the authority must first complete the design of the scheme and commercial negotiations with private contractors. It cannot do this until after Royal Assent. The measures in the Bill provide it with a degree of flexibility in developing funding options. That is vital in ensuring that we do not rule out options that could later prove to be in the best interests of members.
	However, we have been absolutely clear that any funding strategy must meet a core set of aims. We have always said that we would bring employers into the reforms in stages and that we will phase in the rate of contribution that they are required to make. We will need to get those aspects of implementation right, as well as ensure that the right employers have the appropriate information.
	That is the basis on which we are proceeding, and we intend to ensure that that is how we deliver. The unique nature of personal accounts is the key. We want to ensure that the strategy delivers low charges to members, and that it is based on our intention that the scheme will be self-financing and delivered at no cost to the taxpayer in the long run. We want to ensure that the scheme is commercially viable, consistent with European law and not unfairly advantaged.
	The hon. Member for Eastbourne tabled a series of amendments that seek assurances and answers to specific questions about funding. As I have explained and for the reasons that I have given, the authority is not yet in a position to provide all the detailed answers. Our intention is that the costs of setting up and operating the scheme would ultimately be recouped from revenues from membership charges. However, during the period of set-up and in the early years of operation, membership charges will not cover all costs. The Bill therefore contains provisions to allow the authority and trustee corporation to bridge the gap through borrowing, and for the Secretary of State to provide financial assistance through grants, loans, guarantees or indemnities. This does not mean that any of these specific provisions will be used, but it does mean that the authority's ability to maximise value in its commercial negotiations will be strengthened.
	Borrowing from the private or the public sector could be one option to achieve our intention for the scheme to be self-financing. However, that would be prevented by amendment No. 15, which is why I cannot accept it. New clause 5 and amendments Nos. 11 and 28 would require any loans from the Government to the authority or the trustee corporation to be made on a commercial basis. If there is any funding from the public sector, it is intended that that would not provide an unfair advantage and would comply fully with European state aid rules. This is a guiding principle of the funding strategy.
	Amendment No. 16 appears to be designed to ensure that the independence of the trustee corporation—the Personal Accounts Board—is not compromised by the requirement to gain the Secretary of State's consent for any borrowing or investment. The Bill clearly establishes the trustee corporation as independent of Government. However, as a non-departmental public body, the trustee corporation's financial arrangements would be taken into account in the Department's budget. It is therefore right that this should be subject to scrutiny by the Secretary of State to ensure that the wider interests of the taxpayer are taken into account.
	The hon. Member for Rochdale had a brief exchange with me on the subject of grants. There are some areas of the authority's work that he is right to say envisage giving advice to Government and others, and providing services which, because of the sheer scale of the undertaking, would be unlike those that other commercial bodies have to operate. Grants from Government to the trustee corporation may be necessary in the future—for example, if the Government asked the trustee corporation to provide advice or information to help them and Parliament to assess the success of our overall public policy ambitions. As this would not directly benefit scheme members, it would be unfair to expect them to meet the cost. I therefore cannot accept amendments Nos. 27, 10 or 12.
	At this point I would like to reassure Members that the costs that the regulator incurs in establishing the compliance regime will be borne by the Government. That will be done through existing powers, achieving the same aim as new clause 3. I have made it clear that low charges will be at the heart of the personal accounts scheme. However, difficult trade-offs will need to be made between the initial level and structure of charges and how quickly the scheme becomes self-financing. That is one of the issues that PADA is exploring in its public consultation on the best charging structure for the personal accounts scheme.
	New clause 4 and amendments Nos. 13 and 14 demonstrate why we should wait for PADA's advice before taking decisions in this area. New Clause 4 and amendment No. 14 would require the scheme to repay the costs of establishing the personal accounts scheme within five years. That would be likely to lead to unreasonably high charges for the first cohort of members, impacting adversely on their savings and potentially leading to high levels of opt-out at the time when we most need to establish the confidence of savers. I am not saying that it is a wrecking amendment, but it is not far off it.
	Amendment No. 13 would initially cap charges at an annual management charge of 0.3 per cent. It therefore pre-empts PADA's charges consultation and risks inappropriately extending the time that it will take for the scheme to become self-financing. I am not prepared to pre-empt decisions on the funding strategy in this way and therefore cannot accept the amendment.
	Finally, the hon. Member for Rochdale asked for various reports. Amendment No. 9 would require the authority to report on the financial management of the scheme within 12 months of Royal Assent. The financial position of PADA and the corporate trustee as non-departmental public bodies will be reported to Parliament on an annual basis. Further, as a trust-based pension scheme, the trustee corporation will be required to provide annual statements to its members. I see no reason to add to those reporting requirements, which would involve additional bureaucracy.
	I reassure hon. Members that the authority will continue analysing the assumptions and risks around take-up, persistency and contributions as part of its work to develop the funding strategy. However, I will not commit the authority to making public its latest assumptions on funding when it is likely to be in the midst of sensitive commercial negotiations.
	Developing the funding strategy for personal accounts is already a complex and challenging piece of work. I welcome the support expressed by Opposition Members for the project, but I cannot provide them with the guarantees that they want in relation to 2012. I have always said that we envisage that the scheme will start to deliver in 2012, but this is a big project and I cannot guarantee that it will happen. There are tight time scales, and some of the things are not in the control of either the Government or PADA, so we must be realistic.
	We have employed a high quality chief executive and a high quality chairman, who can deliver in the commercial sector. They have both shown that they have the skills, and they are recruiting good quality staff; we need to let them get on with the job. They have given us their proposals to deliver in the broad terms of the Government's policy on 2012, which is what I want to allow them to do. I have acknowledged that they may have to take all sorts of issues into account, if certain matters do not work out precisely as envisaged in the plans, which is always the case with a project on this scale.
	We have got a policy aim—there is nothing dubious about describing it as a policy aim—and we have got a plan for delivering it in 2012. The plans are tight, but they are deliverable. We should let PADA get on and deliver the project. If the hon. Gentleman wants to discuss how that will be done—the costings and so forth—I have already offered the facility of meeting Tim Jones in order to do so.

Nigel Waterson: I am not minded to press the new clause to a vote, but that does not mean to say that I am wholly satisfied by what the Minister has said. In an attempt to be reassuring, he kept telling the House that the introduction of personal accounts is not going to be a big bang. I am delighted to hear that, but as has been said, we do not want a terminal 5 moment, either. Terminal 5 was a massive project of its sort, and it was not a big bang—it was phased in, but phase 1 turned into an unmitigated disaster.
	That is the kind of issue that I am trying to get at in this debate—the nature of the review and its conclusions. I shall certainly take the opportunity to see Tim Jones and get to the bottom of where he thinks things now stand, and yes, of course, if I am told things in commercial confidence I shall not tell anybody else. However, we need to find out precisely what is happening in practical terms.
	The Minister said—I wrote it down—that Tim Jones had delivered his report on time. Is the report in such a condition that it can be placed in the Library or made available in what lawyers call a "redacted version", so that we can at least see the highlights? The issue is not as simple as whether we will get from now to 2012 in one piece, as it were. Presumably, there is a series of triggers, or things that have to happen by a certain date between now and then, hence the charts to which the Minister referred. Once those deadlines start not to be met, the whole thing begins to slide off schedule. That is the key, and without wishing today to detain the House for any great time on the issue, I should say that that is the sort of thing that we will look for.
	The hon. Member for Newcastle upon Tyne, Central (Jim Cousins) reminded us that the measures are part of the Turner package. According to Turner, they were to have been delivered two years earlier, in 2010. We have had this debate on other parts of the Turner package, such as on decoupling, and I hope that we shall come to the issue of restoring the earnings link, which is another key part of the package. Such things, including increasing the state pension age, all go together and we let the timings of the essential ingredients of the Turner package start to drift apart at our peril.
	I was surprised that the Minister put a lot of emphasis on Royal Assent. Technically, of course, lots of things can happen only when the Bill gets Royal Assent. I do not want to be churlish, but the Bill has been a long time out of Committee and only now are we having Report stage and Third Reading; moving a bit faster was in the Government's gift. However, leaving that aside, I should say that the Minister talked about contracts of substantial value being put out for tender. I accept that. However, unless he is making out that the Reuters report is a complete fabrication, it should be clear that lots of people—allegedly 100 consultants—are already working night and day to do something. They are not waiting for Royal Assent, and nor will their bills. What are they doing in the absence of Royal Assent, and how much is it costing? One or two distinguished members of the Select Committee on Work and Pensions are here; it is not for me to say, but perhaps the Committee thinks it is important to look into the potential costs overrun and how the project is being managed.
	That brings me to the Donald Rumsfeld—the "known unknowns"—point. We do not expect Mr. Jones, and certainly not the Minister, to walk on water. We expect Mr. Jones and his team to deal with the known unknowns, and I presume that the things that he knows are outside his control are clearly flagged up in the report. Even on the Conservative Benches, we do not expect him to be aware of the unknown unknowns, about which the Minister was also concerned. No one expects the Minister to guarantee absolutely April 2012 as the start date—all sorts of things could have happened by then, not least to the economy as a whole.
	However, to come to the costs overrun point, it would be worrying enough if the Minister had said to the House, "We can't tell at this stage what the cost overruns are or are likely to be," but as I understood it—I accept that I paraphrase—he said, "We can't say in any event whether there are cost overruns because we do not know what the cost should be." It seems even more worrying that at the moment we have no idea about what the costs will be, apart from a vague figure plucked out of the Turner process. However, it is clear that costs are being incurred, Royal Assent or no Royal Assent, and we need a clearer notion of what rate and level they have already reached.

Mike O'Brien: The costs that are being incurred are those that were envisaged under the Pensions Act 2007 in terms of providing advice, creating the initial framework and doing the consultations to which the hon. Gentleman has referred. However, the actual procurement operation will need to wait until the Bill gets through.

Nigel Waterson: I am grateful to the Minister. I assume that it follows that the £21 million that was allocated in the 2007 Act is yet to be spent and that there is still some money in the kitty; otherwise, somebody would presumably have told us.
	It is clear that costs are being incurred, and at quite a high rate. I cannot vouch for the Reuters story, but Reuters sturdily stands by it and by its sources. Of course, I intend to meet Mr. Jones and hear what he has to stay. It would still be helpful, though, if the Minister could produce a copy of the report that he has received, stripped of the commercially confidential issues, so that the House as a whole can get a feel for how this project is likely to develop, or indeed how it has developed so far. As I said, that may be a matter for the Select Committee.

Mike O'Brien: Given that I am not able to deliver exactly what the hon. Gentleman is asking for but am anxious to be helpful, I wonder whether I could ask Tim Jones to provide a written report for the House indicating where he has got to and how he envisages moving forward. It would obviously be stripped of commercial issues but it would at least allow the House to feel that it is better informed and to see some of the detail of how he plans to take this project forward.

Nigel Waterson: I am grateful to the Minister for that helpful response. If that can be done without producing something that is not very useful, then so be it; I think that it would be worth while in any event.
	Terminal 5 was an instance of a massive project that had lots of clever people and lots of money thrown at it—it even had some 3,000 people brought in as extras, as it were, to try to test the system before it went online—but it still failed on day one, day two, day three and so on, and it was being phased in. I have never managed a project of this size or anything remotely like it—nor, I suspect, has the Minister—but Mr. Jones has, although there has never been a project quite like it. We all need to know about this; again, perhaps it is something that the Select Committee might want to take an interest in. I beg to ask leave to withdraw the motion.
	 Motion and clause, by leave, withdrawn.

New Clause 2
	 — 
	Means testing

'(1) On or before 1st April 2009, the Secretary of State shall publish his projections of the numbers of people likely to be subject to means-tested benefits (including housing benefit) and in "at risk" groups following the introduction of personal accounts.
	(2) If the projected figure published in accordance with subsection (1) exceeds 10 per cent. of the pensioner population, the implementation of the scheme under section 58 of this Act shall be postponed for at least 12 months after the date of publication.
	(3) The Secretary of State shall publish any proposals for reform to address the findings in subsection (1) above concurrently with the publication of the projections thereunder.'.— [Mr. Waterson.]
	 Brought up, and read the First time.

Nigel Waterson: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient to discuss amendment No. 38, in clause 3, page 2, line 37, at end insert—
	'(8) The Secretary of State must publish an annual report on the impact of means-tested benefits on automatically enrolled members of the scheme established under section 58.
	(9) Any report published under subsection (8) shall include details on the number of pensioners facing marginal deduction rates of 40 per cent. and above.'.

Nigel Waterson: On the face of it, new clause 2 looks fairly straightforward and inoffensive. It merely says that the Secretary of State should publish projections of the numbers of people likely to be subject to means-tested benefits, including housing benefit, which is particularly important, and to be in so-called at-risk groups following the introduction of personal accounts. It touches on one of the big concerns about personal accounts; the other one is often referred to as levelling down. Those are the two big question marks hanging over the system. To be blunt, in the past we have made it clear as an Opposition that if we cannot square the circle on means-testing, that could affect the likely success of the whole system. There was a time when that was not the consensus view, but I am delighted that it now seems to be so. This has to be addressed, not necessarily during the Bill's passage through this House, but through a process that has already started, which I very much welcome. That is what new clause 2 does. The Liberals' amendment No. 38—I am sure that they will speak about it themselves—would require an annual report on the impact of means-testing.
	This is, as I have said, a very big issue. In this country, rightly or wrongly—that is not the purpose of this debate—we have gone down a path whereby means-testing has grown very fast. Nearly half of pensioners retiring now do so subject to means-tested benefits. People might well be auto-enrolled who will not be receiving specific advice, because the nature of the Turner settlement means that they will receive so-called generic advice. They might be specifically advised not to auto-enrol into personal accounts, and may save a not insignificant pensions pot as a result, but then end up no better off—or even worse off.
	The issue is not an easy one, and I am the last person to suggest that it is. Far cleverer people than I are wrestling with it, such as those in the Pensions Policy Institute, and Professor John Hills, among other luminaries. The issue is difficult, but that does not mean it is intractable. It is pretty clear that just about everyone who could be considered a serious stakeholder in the process now agrees with that proposition. I was looking at the briefing prepared for this debate by the Equality and Human Rights Commission, which emphasises that it is a strong supporter of the personal accounts system and the principle of auto-enrolment, but goes on to say:
	"However, we have raised concerns that there may be some individuals for whom saving will not pay, as saving in PAs...will serve to merely replace means-tested benefits (such as Pension Credit, Housing Benefit or Council Tax Benefit)".
	It continues:
	"We have previously called for the Government to commit to a public report on the 'pays to save' issue, including modelling the number of individuals likely to be at risk, an assessment of the tradeoffs between different proposals for reform and public consultation with key stakeholders."
	It also says:
	"We were therefore extremely encouraged by the Minister's assurance during committee stage to work with the Opposition and various stakeholders to consider possible solutions".
	That view is echoed by other stakeholders, such as Age Concern, which says:
	"The Government has made some important moves since introducing the Bill to underline its commitment on this issue, most importantly an announcement that it will review the interaction between means tested benefits and personal accounts."
	Rather kindly, it also goes on to say:
	"We also welcome the positive response to this approach from the opposition spokespeople."
	Presumably, that includes me. It continues:
	"This process has now started and we welcome the opportunity to contribute."
	I might be forgiven for slightly correcting recent history. Although I stress that I welcome what is now happening, and I shall touch on it in a bit more detail, there was a time not that long ago, under the previous Secretary of State, where Opposition Members were painted as the bad guys, who were rocking the boat and letting the side down by suggesting that there was a major problem. In fact, Ministers and some of the outside organisations have made a major shift, and it is now quite difficult to find anyone who does not accept that there is a major problem that needs to be addressed.
	That is not to say that there may not be a solution at the end of the process, which I shall describe in a little detail. Various possible solutions have been punted around, but this is not the occasion to go into them in any detail. Attempts to look at trivial commutation, income disregard and a variety of other possibilities that might have an effect on the problem have all been considered. However, the fact remains that almost all the options that have been floated so far carry their own problems, which need to be gone into in detail.

Julie Kirkbride: I am glad that my hon. Friend has put on record the fact that our party was the first to talk about the issue, and it is good that there is now more widespread agreement that it needs to be considered. It is also worth putting on the record the fact that we already receive representations from constituents with personal pensions, who were therefore probably higher up the income chain in their working lives to be able to save for them, who feel extremely aggrieved that, say, their neighbour or someone else they know is accessing benefits from which they are excluded because of that income. Now that we are going further down the chain of income, that problem will become much more acute and affect people with much more modest savings, incomes and pensions. We do not want to undermine the idea that everyone should save for a pension by arousing widespread resentment, so I welcome the greater interest that the Government are showing in the matter.

Nigel Waterson: I am grateful to my hon. Friend, who makes a fair point. Almost by definition, the 6 million, 7 million, 8 million, 9 million, 10 million or however many people who, it is hoped, will be attracted into personal accounts will be those who are currently outside existing pension provision. Many may simply be seen as unattractive propositions by the pensions industry and will be in a marginal situation as to whether the scheme will be good or bad for them.
	My hon. Friend's key point, to which I was coming, was about confidence. At one time, the argument was advanced that there would not be a problem until 2020 or even later, when it would become apparent to people, after they had saved for some years under personal accounts following the assumed start date of 2012, that they were not receiving the returns that they had been led to expect. It has been clear to our party, and it is now clear to everyone, that in the run-up to 2012, and not later, journalists and others, whether we like it or not, will be writing a story to the effect that some people in similar situations will be benefiting and others will not be. If, as journalists say, that story has legs, it could cause untold damage to confidence in the system, not least as a tool for the unscrupulous employer who wants to persuade people not to auto-enrol in the first place.
	Now is a good moment to pay full tribute to the Pensions Policy Institute, which has done so much work on that and the other big issue, the so-called levelling down, to which we shall come. The PPI set the foundations of the work that will now be carried forward by identifying the at-risk groups of people—whether low, medium or high risk—under the proposals. The PPI came up with the expression "the funnel of doubt" to refer to the likely level of means-testing even after the reforms.
	There is no doubt at all that the level of means-testing will fall somewhat when the reforms are introduced. However, there is still a difference between the Government and the PPI and other experts on what that level will be. As John Hills and others have picked up, it is particularly difficult for people at the beginning of a career or a lifetime of work to predict where they will end up, with respect to a broken work record, marital break-up or whatever else. It is important that we should consider carefully the likely effects of the interaction between means-tested benefits and personal accounts.
	No matter how much work has been done by outside bodies, particularly the PPI, all are now at the point at which they can make progress only by having access to the sort of model that the Department for Work and Pensions uses—the Pensim2 model, as it is called. I am particularly pleased that, as a separate and parallel process to the passage of the legislation, we are now all engaged in an attempt to establish the size of the problem, within certain parameters, and to run a slide rule over the suggested solutions. The Minister has been extremely helpful in allowing people access to Pensim2, and in putting together a series of meetings, seminars and all those wonderful things that come to us who are involved in the pensions world. The initial phase has involved ensuring that we are all signed up to the basic assumptions that go into any proposition that is run through the model.
	There has already been one big step forward, for which I claim no credit whatever because it was nothing to do with me. There was a problem, as despite its no doubt excellent other characteristics, the Pensim2 model did not take any account of housing benefit. I am told that that is no longer the case, and that it does now incorporate housing benefit. Why does that matter? It matters enormously because one of the major factors in the at-risk groups identified by the PPI is the question whether people rent their home in retirement. That makes a massive difference to many of those people.
	There is a whole range of issues to be addressed. Assumptions are made about take-up rates, the likely success of personal accounts and the whole question of behavioural reactions to the new policy. This is not an easy task, and we have always said that we did not necessarily expect it to be resolved within the lifetime of this legislation. We did expect, however, that the process should start off in a serious fashion, and in a way that we could sign up to during the passage of the Bill. So far, so good. There is clearly a lot of work still to be done, however, and we might not agree on all the parameters and the options and how they should be looked at.
	I hope that the Minister will say a few words on this issue in a moment, but I think that I am right in saying that the ultimate aim is to produce a document—perhaps a report that will be available to all and sundry—at the end of the process, possibly in the autumn, which will try to nail some of the uncertainties that are in the system at the moment. Perhaps it will admit defeat on the known unknowns, to go back to Rumsfeld, but it should at least set out some of the options more clearly and possibly eliminate some of them, if that will be helpful. This will not be a problem for this Government, but it will be one for future Governments of whatever political colour, and it is important that we tackle it now.

Jim Cousins: I am not trying to tempt the hon. Gentleman on to some rather difficult rocks here, but is it not possible that, unless we get this right, many people will seek to take a double advantage of the new system by using the trivial commutation rules? That could well involve the people who have very small pension pots because they have very small incomes, and a lot of unscrupulous people could target those people precisely to get them trivially to commute their small pension pots. We need to be clear about this point if we are to achieve integrity in the new system.

Nigel Waterson: That is an important issue that we need to guard against. Furthermore, it is clear from the work carried out by the PPI that there is a whole tranche of people—we do not know how many there are—who would be better off taking a lump sum and spending it as quickly as possible. That rather goes against the public policy aim that we all hold, which is that people should save for their retirement and have that money available for when they retire. The hon. Gentleman makes an important point, but that is just one of many issues that we need to grapple with.
	I said earlier that there was now a kind of reverse consensus on this issue. It is a big issue that needs to be addressed and we have all joined up in addressing it. I was therefore just a trifle taken aback the other day when I saw the reported remarks of the new chairman of the Personal Accounts Delivery Authority, Paul Myners. In a speech to the National Association of Pension Funds conference in Edinburgh, he was reported to have compared this situation to the introduction of mandatory seat belts in cars. He is reported to have said:
	"There are a small number of people whose injuries are increased and even some people have died because they were wearing seatbelts".
	He went on to make the point that that did not outweigh the point of having compulsory seatbelts. I think that we can all agree with that in the context of seatbelts. I took the trouble of finding out how many people are injured each year because of wearing seatbelts as opposed to not wearing them. According to the Royal Society for the Prevention of Accidents, about 1,100 people a year are injured in some way because they are wearing seatbelts rather than the opposite, but compared with the number of people with driving licences, that is a tiny proportion. I am a bit worried about whether anyone making the kind of assumption that Mr. Myners appears to be making would realise that such a tiny proportion was involved.
	The real issue here is that nobody knows. The numbers in the at-risk groups could be hundreds of thousands or millions. I suspect—this is my own hunch—that the figure is in the high hundreds of thousands, but we simply do not know, and we will not know until the modelling has been properly done. We are all working to that end. This is not a problem that can be dealt with head on by saying, "Well, just because there is going to be some rough justice for some people, it does not mean to say that it is not a good idea." Yes, the prize is that, hopefully, millions will be drawn into saving for their retirement, admittedly by the use of inertia in most cases, when they are not doing so now. That has to be a major prize, but it cannot be achieved at the price of large numbers of people, often on very low incomes, being worse off or no better off.
	That is why the issue is important and why I greatly welcome the Government's change of heart, if I may put it that way. I am looking forward to our playing our full part in the process. It does matter, not just to the credibility of and confidence in the new system of personal accounts, but to all these people, however many there are, who are involved.

Julie Kirkbride: I agree with what my hon. Friend is saying. Presumably, in looking at the flowcharts and projections for the numbers of people who will be affected by the means test, researchers will also have to make assumptions about the minimum income guarantee. In the past, that has also been an issue for means-tested benefits, as it poses the question of the reliability of the Government's promises that the minimum income guarantee will continue to rise in line with earnings—until time ends or whenever it might be. I presume that that will make a big impact on the projections for how many people will fall foul of the means test.

Nigel Waterson: My hon. Friend is absolutely right. For the time being at least, the Government are committed to increasing pension credit in line with earnings, but a whole series of assumptions will, of course, have to be made and spelled out in the making when the calculations are done. One has to make assumptions some way out into the future about a range of things—not least the level of means-tested benefits available under successive Governments of the same or different political colours. That is an important issue, but dealing with it is a bit like trying to put up a tent in a high wind: unless we nail down one corner, we will not make a lot of progress, so a shared set of assumptions will have to be agreed so we can move forward. There will still be the known unknowns, but that is the way it is always going to be.
	To make one final point, on the basis of all the research done so far, I am utterly convinced that the starting point has to be the at-risk groups identified and then refined by the PPI, and then identification, within parameters, of the numbers of people likely to fall into each of those categories, why they are likely to do so and what can be done to help them. Failing all that, we will have to see what can be done within the system of generic advice to ensure that people opt out if it is in their best interests to do so. There are some massive questions here, which makes this one of the two biggest single issues underlying this entire legislation. We are certainly keen to play our part in finding a solution if there is one.

Paul Rowen: I agree with the hon. Member for Eastbourne (Mr. Waterson) that means-testing is a vital issue. We need some clear answers on it before the legislation becomes operational in 2012. I need not remind the Government of the mess that they have got themselves into with the abolition of the 10p income tax rate to illustrate what happens when Governments fiddle with benefits and charges. When that cut was announced last year, we were not told that 5.2 million people would end up worse off. That is not the figure that we were given. I doubt that members of the Government would have supported the then Chancellor, now the Prime Minister, as readily had they known how many people would be affected.
	As for the 5 million to 7 million people who may save for their pensions with personal accounts, it is vital for us to understand the impact of their benefits on their pensions. It would clearly be wrong for us to encourage people to enter into a scheme enabling them to save money and make contributions if, on retirement, they would find that the Government had given with one hand and taken away with the other. That often happens as a result of the current benefit trap, and it is a powerful disincentive for many people to go back to work. That is not the purpose of the Bill; it is intended to encourage more people to save and become prosperous in retirement. Cutting their benefits will defeat the object. I presume the Government can assure us that the Bill is intended not to save money for the Exchequer in terms of the benefits paid out, but to ensure that pensioners are better off.
	I agree with the hon. Member for Eastbourne that we owe a great debt to the Pensions Policy Institute for its estimates in this vital area. The number of eligible pensioners who are means-tested to establish their entitlement has risen dramatically under the present Government, from 37 per cent. back in 1997 to around 57 per cent. today. We know what the effects of the means-testing system have been. Although the Government laud the benefits of pension credit, we know that a large number of pensioners—some 1.5 million—are not claiming it. We also know that council tax bills have already risen by 87 per cent. under the present Government.

Anne Main: They have risen by 147 per cent. in St. Albans.

Paul Rowen: I am giving a broad figure. At the same time, only 53 per cent. of pensioners who are eligible for council tax benefit claim it. If pensioners who have saved find that as a result of their saving, the benefits to which they are entitled are dramatically reduced, incentives to save will be eroded and the Bill's objective will be destroyed.
	Housing benefit can involve a high marginal deduction rate. We know who some of the high-risk groups are. Single people are likely to be worse off because they generally do not save as much for their retirement, and they may well rent their properties. There are medium-risk groups, such as those in their 40s and 50s who are not currently saving for their retirement. They could well lose out, although that will depend on what happens when they retire. Clearly, it would be wrong if people who put money into the personal pension scheme were to find that as a result they were worse off.
	We need some analysis of the scale of the problem. How many of the 5 million to 7 million people are likely to be worse off? There must be one of two options. I admit that it will be impossible to tell someone in their 20s or 30s, "By the time you get to retirement, it won't be worth you saving," but we need to be able to advise people in the medium and high-risk groups at the beginning that they ought to opt out. If we cannot do that, we will be misleading people. I do not agree with the hon. Member for Eastbourne, who said, "It's a seat belt, and some people have got to be worse off." We must give two pieces of advice. We must make amendments to the benefit system to ensure that people are not disadvantaged—and we must be clear in our analysis of what changes need to be made to deliver that—or we need to advise people that they had better not save through a personal pension scheme, because they would be worse off.

Michael Penning: The hon. Gentleman's comments highlight a crucial point about all future pensions. It is to do with confidence. The people in the schemes, many of whom will be at the lower end of the income bracket, must have the confidence to look forward. This is a Government-sponsored scheme, and if they do not get this advice we may well find 20 years from now that the ombudsman is looking at Government advice yet again; we have already had the debacle with the occupational pension schemes. It is crucial that people have the information, in order for them to build confidence so that they are willing to invest in their pensions.

Paul Rowen: I agree with the hon. Gentleman; I am a member of the Public Administration Committee, which has championed the cause of those who lost out on their pensions through occupational pension schemes. We do not want people to lose out in this case. Therefore, I welcome what the Minister has done in response to the discussions we had in Committee, by setting up the working group to carry out the detailed analysis and by making that information available to all parties as the Bill progresses through Parliament. That is important.
	Once the analysis is completed and we have a clear idea of what is happening, it will be important to have an agreement that changes will be made to the system over time. I accept that some issues may arise 10 or 20 years down the line, but we need to set in train those necessary changes. We also need to be flexible as time moves on. I appreciate that the Minister cannot commit future Governments, but we have to accept that market conditions change and so does the entire employment situation, and what we may be legislating for today may not be appropriate 30 years down the line. We need to be aware that this is a problem—the benefits trap is a problem now in any case, as it is a disincentive to work—and we need to put in place the flexibility so that as more information becomes available the Department can respond to the issues and ensure that people are not worse off.
	We all subscribe to the overall broad aim of the Bill—to get more people saving so that they have a more prosperous old age. When we address some later clauses and look at the earnings link, it will become clear that in terms of pensions this country is the poor relation in Europe. We are almost celebrating 100 years of the pension, but we are not delivering what our forefathers originally intended. So, I hope that the Minister will accept that we all have serious concerns about this issue. It is important that the information is shared and that, over time, we have a strategy that delivers the overall aim of ensuring that all pensioners are better off. It is unacceptable to say that small numbers might not be. Although we cannot legislate for every possibility, we must have the flexibility to be able to guarantee people that saving in this way will benefit them; if that cannot be delivered, we should not be encouraging them to save.

John Butterfill: The Minister will know that I have supported the Bill in principle from its outset, but he will also know that this issue is the one area where we must take radical and courageous action. The Government must do that if they are to make this a worthwhile Bill.
	I do not intend to reiterate the problems about which many hon. Members have spoken. It is true that we are dealing with a group of people who will not be able to afford to take independent advice, and thus will be reliant on generic advice. Generic advice will not be good enough to overcome the problem that we will encounter if nothing is done. We can all remember the mis-selling scandals of the past, and I fear that we might be sowing the seeds of mis-selling today, unless something certain is put into the Bill to deal with the problem.
	The other alternative, if we do nothing, is that very large numbers of people will be advised in the media and elsewhere to opt out. That would defeat the whole object of the Bill; we want people to save for their retirement and to have better financial security. If they are being advised in their newspapers that they would be mad not to opt out, who would blame them for deciding to opt out? The hon. Member for Newcastle upon Tyne, Central (Jim Cousins), who is well versed in these matters, made it clear that even those who stay in the scheme may opt for trivial commutation, which would be almost equally bad as opting out in many cases. It is incumbent on us now to put into the Bill something that will deal with the problem.
	There is only one way of dealing with the problem. We can play around with all sorts of formulae, but some element of disregard is the only true way to encourage people to save in that way. Only if they know that they will inevitably be better off staying in the scheme rather than opting out, and if that is reinforced by the newspapers they read and by television and radio programmes, will they not opt out. We can argue about how the disregard should operate—whether it is an absolute disregard, whether it is a mechanism, whether it is phased, what the timing is and so on—but something must be put into the Bill that makes it clear that people will be better off staying in the scheme rather than opting out. Unless we include such a provision, the Bill will be worthless.

Michael Penning: I promise not to delay the House for too long. I support new clause 2. I was fascinated to hear the common-sense approach that, yet again, the Minister took to the issue. The nature of means-testing means that we are dealing with the most vulnerable people in our society: those whom the state feels are below the threshold that we would all like people to be at, without needing a means-tested benefit. As a result, such people are the most ill-informed and cannot purchase the information that Members of this House and other members of the public could; such people will not receive independent financial advice.
	My hon. Friend the Member for Bournemouth, West (Sir John Butterfill) just alluded to the fact that such people will rely extensively on the information that the Government and the schemes' actuaries put out to the public. Above all—this is where I agree with my hon. Friend—they will rely on the tabloid press. If the tabloid press start saying that opting out is probably people's best option because it will be safer, and that people should not worry because they can always fall back on means-tested benefits because they might not be better off, that would make this part of the Bill, at least, fall apart. The Minister would probably agree about that.
	It is therefore imperative to put as much basic information as possible into the public domain as early as possible, to enable people to make a conscious decision to stay in the scheme, because there could be an exodus. I remember that back in the 1980s, it was "opt in, opt out"; lots of different schemes were in operation and things were very complicated. Financial representatives phoned people up to say, "I think you should opt out of SERPS," or, "You should opt in to SERPS." We made decisions about that specific matter, many of them wrong. I made wrong decisions, but I was persuaded to do so by a financial representative.
	What worries me enormously is that because we are dealing with the most vulnerable people, who we are trying to get off benefits and into a pension scheme that prevents them from needing means-tested benefits as they reach their more mature years, all the hard work, everything that has been going on with all the different consortiums and all the consensus that has been built up could fall apart so easily, and even more people might end up on means-tested benefits. None of us would look forward to that situation.

Mike O'Brien: I welcome the way in which the Front-Bench spokesmen for the Opposition parties, and, indeed, all hon. Members, have sought to deal with this issue. Some months ago, it was a matter of some controversy, but I think that we have found a way of at least examining what the hon. Member for Eastbourne (Mr. Waterson) rightly said is an enormously complex and difficult issue. Whether we are able to find ways of resolving it is another matter, but we envisage that the process we have set up will enable an examination of the issues. As he mentioned, we also envisage publishing later this year a report that examines the parameters of the debate and establishes ground rules and understandings about the nature and extent of the problem, the policy ways in which it might be examined and the implications of some of those, without coming to a recommendation. That would be a matter for debate between the parties and between various stakeholders afterwards.
	The debate was interesting not least for the various descriptions given. I believe that tents in high winds and seat belts were mentioned. I was reminded of the fact that, in evidence to the Committee, Lord Turner gave a further analogy, which is relevant to the discussion. He said that
	"you cannot treat the fact that some people post facto will not have done well out of saving as proof that it is a bad idea to advise them to save. An analogy would be that if at the end of the year your house has not been burgled, it does not mean that it was bad advice to buy a household insurance". ——[Official Report, Pensions Public Bill Committee, 17 January 2008; c. 98.]
	We are examining a difficult issue. It is clear that we all have constituents who are on pension credit, yet they have a second pension. How we are able to predict which people are likely to end up in that position, whether we are able to do so and what advice such people should be given if the circumstances that they will find themselves in are not always predictable are complex matters. Personal accounts will not create such a new circumstance that we are not already, in a sense, facing it. A large number of people are automatically enrolled into a pension scheme. Tesco has its own automatic enrolment scheme—I understand it to be a reasonably good defined-benefit scheme—and it is therefore allowing people to build up pension pots. There is no guarantee that those people will be able to have an uninterrupted career at Tesco and that they will never fall on pension credit.
	We have said throughout—the point was made by the Liberal Democrats earlier today—that personal accounts should not provide advantages over and above those schemes with which they will compete. Therefore, we are trying to set up a basic scheme that people can use if no better scheme is available. It will complement, rather than compete with, other schemes.
	If we were to provide, solely for personal accounts, a guarantee that whatever happened anyone holding one would not lose out, it would give personal accounts a commercial advantage over and above any existing private sector schemes. Therefore, we would undermine the very principle of complementing what we currently have. If a low-paid employee can choose whether to enter their employer's scheme—it might be a good scheme with perhaps a higher contribution from the employer than personal accounts—or a personal account, and they get a guarantee from the latter that they do not get from the other scheme, personal accounts would have a commercial advantage. We need to be careful to bear in mind the basic principles behind the creation of personal accounts and ensure that, in dealing with one problem—and I accept that it is an issue—we do not undermine any of those principles.

Paul Rowen: I accept the point that the Minister makes, but does he agree that one sure way around that problem is to restore the earnings link to the state pension so that that increases in value? We could also move to a citizens pension, as we have proposed, that would provide a guaranteed minimum pension in retirement, with anything else a bonus.

Mike O'Brien: I certainly agree with the hon. Gentleman about restoring the earnings link in due course, and I will come to that in a moment. I would welcome his views on how we could find enough dosh to introduce his citizens pension without taxing people vastly. The money we spend comes from the taxpayer, and we have to balance the interests of the taxpayer with those of the pensioner.

Michael Penning: The point that I was trying to make earlier is that we must give our best shot at predicting what will be in the pot in the years ahead. That is obviously very difficult, but if I went to a private insurance company and said that I wished to invest £30,000 in a scheme, the actuaries would make some sort of prediction about the outcome, and the state pension would be included in that. It is therefore incumbent on the Government to give their best shot at prediction. I accept that it will be difficult. We cannot predict the future, but it has always been the job of actuaries to try to predict the size of the pot. That is why it is important not to guarantee more—it would skew the whole market if people were guaranteed a greater amount than they would get from a separate pension scheme—but to provide a knowledge base and give people some idea of how much they will get. People must have that information.

Mike O'Brien: The hon. Gentleman makes some interesting points, and I will address them in a moment or two.

Lynne Jones: My hon. and learned Friend mentioned providing an unfair advantage, but it is an important principle that people's savings should not undermine their ability to collect state benefits. As he says, that point will be discussed when we come to the issue of the earnings link, but it is an important principle in reducing means testing. He mentions taxpayers' money, but the people who take up the scheme to save for their pension will be low paid. They are taxpayers too, and the fairness agenda means that we must also be fair to those on low incomes who are putting small amounts of money—whatever they can afford—into such schemes. We must ensure that they do not miss out on state benefits later.

Mike O'Brien: My hon. Friend is right, especially about trying to ensure that we have a state system that provides a proper basis for people. One of the key aspects is the restoration of the link. One argument for restoration arises from this very debate. If we did not restore the link, we would end up with some 60 per cent. of pensioners on pension credit, and we do not want that to happen. We can reduce the numbers on pension credit by about half if we restore the link and provide opportunities for private savings so that people can build up a pension pot that will increase the amount that they would get just by relying on pension credit. The reforms in the state sector are part of the process, and the private sector changes will also help to ensure that pensioners get a better deal—and get more money in the end.

John Butterfill: I accept that the scheme cannot compete unfairly with providers in the private sector or companies' schemes, but we are talking about persuading some of the poorest people in society to save. Even though they may be saving small amounts, they will be giving up a large—to them—proportion of what they are earning. We are also talking about people who are unlikely to be especially attractive to the commercial sector, because the costs of their business would outweigh the benefits—we know already that the commercial sector turns down small amounts—so we are talking about a special group. However, there will have to be some element of disregard, because someone might be very successful later in life.

Mike O'Brien: I hear what the hon. Gentleman says. The issues of savings incentives, disregards and trivial commutation can all be considered. We discussed some of them in Committee, and the Government have decided to set up a Government-led work programme to consider the whole issue, evaluate the evidence and consider the interaction between pension savings and income-related benefits in a reformed system. The programme will examine the incentive effects, the balance that we need to strike between alleviating poverty and incentivising savings, and the cost constraints that we face. It is important that people accept the responsibility to provide for themselves and also that the pension credit safety net is there if needed.
	The effect of new clause 2, which I suspect the hon. Member for Eastbourne will not press, would be to delay the introduction of personal accounts if the number who may not benefit is greater than 10 per cent. That would deny many individuals the real benefits of starting to save early. The reforms represent the last piece of our pensions puzzle and it would be folly to delay introduction on that basis.
	The effect of amendment No. 38 would be to require the annual publication of our projections of the impact of means-testing for members of the personal account scheme and those whose pension savings might be subject to marginal deduction rates of 40 per cent. or higher. We have already published our projections of entitlement to pension credit until 2050, and are currently finalising a fact sheet of projections of entitlement to all income-related benefits for the pensioner population. We expect to publish that shortly.
	There is no need, therefore, for such an amendment to the Bill. Publishing projections of benefit entitlement is routine and represents good practice and we intend to continue with it. Indeed, my right hon. Friend the Secretary of State, when he was in my job, advised Parliament in Committee on last year's Pension Bill that we already regularly publish that information, usually annually. I am happy to reiterate that statement in order to reassure the House. I believe that our package of reforms represents the right balance.
	Let me deal with generic advice, which has been raised both by the Liberal Democrats and by the hon. Member for Hemel Hempstead (Mike Penning). Clause 9 recognises that individuals will need access to relevant and accurate information when they are auto-enrolled, but amendment No. 37 would mean that all those who were auto-enrolled would be entitled to publicly funded independent one-to-one generic advice. I do not agree that one-to-one advice will be needed by every job holder. That is because the decision to remain enrolled will be straightforward for most people. The employer contribution means that most people will benefit and enjoy a more prosperous retirement. Good information is important and the DWP and other organisations, such as Citizens Advice, the Pensions Advisory Service and the Financial Services Authority, already provide some elements of advice.
	We will ensure that every automatically enrolled individual has access to the range of information that they need to understand the process of automatic enrolment, the pensions scheme that they will be enrolled into, their expectations for a state pension and the implications for later life. As Members will be aware, there is at present no legal requirement for individuals to receive any one-to-one advice before they are automatically enrolled on an occupation pension scheme. Giving people a new legal entitlement to one-to-one advice could give them a misleading impression that automatic enrolment is either a risky and complex process for which they must have that advice, or could lead to their making erroneous decisions. We therefore take the view that the best approach is to ensure that people know the basic information about automatic enrolment and what it means for them.
	If it is a private sector pension and the person is enrolling into personal accounts, the pension providers will have advice about the implications of their product that they will give to those who are automatically enrolled into the scheme. In many cases, such advice is given now. We will be dealing with many people on low incomes, and although I entirely accept the views of the hon. Member for Bournemouth, West (Sir John Butterfill)—who knows much more detail about our parliamentary pension scheme than I do—advice and information is already being given out by some of the schemes. I do not want to create a system whereby we have to load on a lot of advice for personal accounts in particular, because the cost will end up being paid by people who are enrolled into personal accounts. If we load up the cost, it will end up being a charge on the members of the scheme.
	We need to provide generic advice, which is already available. Otto Thoresen has already published a report in which he referred to the provision of generic advice for those who were entering personal accounts. He rightly made the point that that is not just a problem for personal accounts but that it has a broader base. We are looking at the Thoresen review's details on generic advice so that we can identify ways in which we can take forward the provision of the sort of advice that people on particularly low incomes will need.

John Penrose: Will the Minister give way?

Mike O'Brien: If the hon. Gentleman will forgive me, I have given way rather a lot and have been on my feet for a while. I know that people want to move on to other issues.
	We are pleased that Thoresen's money guidance will build on provision from the Pensions Advisory Service and other organisations. We agree with him that auto-enrolment and personal accounts do not create a new need for a different kind of information or guidance. I do not agree that there is a need to supplement all that with one-to-one advice.  [ Interruption. ] I hear some chuntering, so I will give way to avoid that if nothing else.

John Penrose: I thank the Minister, and I apologise for chuntering at him. The reason why I was muttering was that Otto Thoresen has said that his report does not cover the kind of generic advice on personal accounts that the Minister is describing. He came before the all-party Work and Pensions Committee a few weeks ago, and I asked him that question. He said that it does not cover that. The Government might need to re-examine the issue with some care. Ministers have been saying such things for some time. They came to the Select Committee and said, "We will see the results of the Thoresen review, which will tell us how to provide generic financial advice."
	The Minister will know that the promise that is being made to provide such advice to the range of people who will be enrolled in the new personal accounts system is potentially huge. I do not think that it has been done on such a scale anywhere else in the world. The Thoresen review does not provide any help on how it will be done, so it is rather difficult to pray in aid that review when saying how the Government propose to square the circle.

Mike O'Brien: I hope that the hon. Gentleman will forgive me, but I am not sure that there is a great deal of difference between us. My point was that Thoresen shows in his report that personal accounts do not present entirely new issues. As far as Thoresen is concerned, the need for generic advice in certain circumstances when people are auto-enrolled into pension schemes—that is happening today—is not substantially changed by personal accounts, and so new issues are not brought up. There are issues of scale, but they are not new when it comes to the details of individuals who sign up or do not sign up.
	I can pray in aid the report in the sense that Thoresen has identified some ways in which money guidance can be piloted and considered, and we are examining those proposals at the moment. That might—I deliberately use the word "might"—provide some element of guidance on personal accounts and a range of other issues such as when individuals, who are often on low incomes, have to enter into substantial financial dealings, including mortgages and a pension scheme.
	I am not sure that there is such a difference between the hon. Gentleman and me as he seemed to think. Thoresen's references to personal accounts, even though they were brief, did not identify specific points or go into any detail. He basically said that the problems that we will have are much the same as those that we are having on a range of other issues. Providing generic advice is therefore one way to help people to make some of the important decisions that they have to make.
	I hope that on the basis of the points that I have made, the hon. Member for Eastbourne will feel able to withdraw the new clause. I thank him again for the way in which he introduced his discussions on pay-as-you-save.

Nigel Waterson: The Minister has rightly surmised that I do not intend to press new clause 2 to a vote.
	I want to say a couple of things. First, despite my huge respect for Lord Turner, I do not think that the house insurance analogy holds water. We are saying that people will save for their retirement and then not get something to which they would have been entitled. With respect, that is not quite the same as saying, "I haven't been burgled, so can I have my money back?" to an insurance company. That is the challenge.
	As I have made clear, we are embarking on a process. We are all going on a journey together and we will see where we will end up. We could well end up in a situation like the scene at the end of "Planet of the Apes", where they come back to where they started, see the statue of liberty and discover that they have not been anywhere. Who knows? We will certainly give it our best shot, and I am sure that the Minister and his officials will, too. We have to see how the process pans out.
	We will certainly keep a close eye on how the process works. We reserve the right to bail out at any point if we are not happy with the way in which it is developing, but we want to see it go forward, as do lots of other people. We are, in a rather twee way, included in the Minister's definition of stakeholders, but I suppose that there are other stakeholders out there who are every bit as important and whose involvement is also extremely welcome. On that basis, I beg to ask leave to withdraw the motion.
	 Motion and clause, by leave, withdrawn.

New Clause 6
	 — 
	Existing pension provision

'In accordance with its functions under section 69 of this Act, the Personal Accounts Delivery Authority must, to the best of its ability, minimise any adverse effects from its activities on existing, good quality occupational and personal pension schemes.'.— [Mr. Waterson.]
	 Brought up, and read the First time.

Nigel Waterson: I beg to move, That the clause be read a Second time.

Madam Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 29, in clause 3, page 2, line 28, leave out subsection (5) and insert—
	'( ) Subsection (2) does not apply if there are prescribed arrangements under which the jobholder is entitled to become an active member, with effect from the automatic enrolment date, of a qualifying scheme which is a personal pension scheme of a prescribed description.
	( ) An order will be made under this section to prescribe the terms under which it is applicable, and the basis on which its application may be withdrawn with respect to specific scheme providers or employers.'.
	No. 20, in clause 70, page 34, line 25, after 'in', insert 'existing'.
	No. 21, page 34, line 25, leave out 'qualifying' and insert 'occupational and personal pension'.
	No. 17, page 34, line 26, at end insert
	'among those on low incomes and who are not currently saving enough for retirement.'.
	No. 22, page 34, line 26, at end insert
	', and the Authority shall at no time seek to provide financial products beyond the scope of personal accounts;'.
	No. 23, page 34, line 29, after 'on', insert 'existing'.
	No. 24, page 34, line 29, leave out 'qualifying' and insert 'occupational and personal'.
	No. 18, page 34, line 38, at end insert—
	'(g) the best interests of prospective members in the period prior to 2012 are served;
	(h) the level of savings shall be increased as well as the number of existing savers, and that in general better retirement incomes are achieved.'.
	No. 19, page 34, line 41, at end insert—
	'(4) The Secretary of State shall collect and publish appropriate data annually, and will consult with the industry, to measure the extent to which the Authority has achieved these principles in carrying out its function.
	(5) The Secretary of State shall by regulation identify the data and targets to be sued for this purpose.'.

Nigel Waterson: This is another group of amendments that is rather like one of those cars that can be bought at certain scrap yards that have the front of one car and the back of another. The amendments refer to two distinct issues, so I shall separate them immediately. New clause 6 and all but one of the amendments are concerned with levelling down, which is the other massive issue that lurks throughout the Bill. I shall come separately to amendment No. 29, which is on another matter that was important in Committee: workplace pensions and group personal pensions.
	What do we mean by levelling down? We mean a scenario whereby, with the advent of personal accounts, finance directors advise their board that participation in their own defined-benefit pension scheme could double almost overnight, with the cost implications that that would carry. Companies that had not already closed their existing defined-benefit schemes to new or even existing members, assuming that there were any such companies by that stage, would then take the opportunity to say, "Well, we are closing our scheme now, but there is a perfectly good new scheme called personal accounts, backed by the Government, that we would point you in the direction of."
	If I have learned anything doing this job as shadow Pensions Minister, it is that there is an active desire on the part of large tranches of the population not to know anything about pensions, or to find out what level of contribution they should be paying and what pension such a contribution would produce in later life. There is almost an unwillingness to engage in the issues. At almost every seminar to which I am kindly invited, some academic seems to get up and say that he or she has done a study and come to much the same conclusion—that the vast majority of people in this country do not really engage in the pensions issue. Almost any effort from any quarter to try to improve that situation has to be welcomed. However, when the moment comes, many employees may simply not inquire whether it would be sensible to move from a DB scheme run by their employer, in which the level of employer contribution may be much higher than is envisaged under personal accounts, and what difference it would make to their pension.
	This is not, by any stretch of the imagination, an attempt to reopen the Turner settlement, which was based on a series of compromises and took into account different views, including those of the CBI and all sorts of others. However, let us remember that an overall contribution level of 8 per cent. will not deliver a very comfortable retirement. It is a massive step forward for people who have no provision at all at the moment and should have, but there is concern that the mere arrival of personal accounts will have an effect on existing, more generous pension provision.
	The point of new clause 6 is straightforward: to say that there should be a duty on PADA to minimise the effects of the introduction of personal accounts on existing pension provision. I cannot really see why the Government should not accept a new clause along those lines with alacrity, because it has been pretty clear since the Turner report that we are all on the same wavelength and believe that we should focus on the so-called target group set out by Turner, which is predominantly people who have no existing pension provision. It will be the ultimate tragedy and irony at the same time if, after this process, we end up increasing the number of savers but not the amount of savings, and if all we do is recycle roughly the same amount of savings in the pensions system, or even worse. I shall come to that possible scenario in a moment.
	Our approach in Committee, and to some of these amendments, has been shot through with attempts of all sorts to erect a kind of Berlin wall between personal accounts and existing pension provision, whether by banning transfers in and out or by banning contributions above a certain level. It is still a matter of regret that the figure of £3,600 a year, which is firmly on the record as being the Government's position on the maximum annual contribution, is not in the Bill, but so be it. We have tried to put it in the Bill and, in true form, have failed dismally at every attempt. In other ways, too, we have tried to ensure that there will be no interference with existing provision by the new personal accounts system.
	We must turn again to our old friend the Pensions Policy Institute, which has done impressive work on levelling down. If I remember rightly, it was funded by the Nuffield Foundation. As the PPI put it:
	"Levelling-down refers to the risk that, in response to the Government's proposals, employers may decide to close existing occupational pension schemes that offer more generous pension benefits to their employees and instead enrol employees into the new personal accounts."
	It went on to say:
	"Levelling-down is an important policy issue."
	I entirely agree with that. It is one of the two most important policy issues surrounding the Bill. As the PPI said:
	"There is a lot of uncertainty about how employers will respond to the reforms".
	It modelled various effects: those of no reform, of employers continuing to offer pensions on their existing terms, of what it calls "cost control", and of the modelled employer response. Those models produced wildly different projections of what could happen. The PPI made the point that without any reforms at all
	"there could be a decrease in annual total pension contributions from around £40 billion in 2006 to around £30 billion by 2050."
	So on one level, doing nothing is not really a sensible option.
	The PPI also looked at the very optimistic scenario of pension contributions increasing by about £10 billion annually. It then considered what it called a
	"very pessimistic and extreme scenario"
	that could involve the shrinking of the market below its current level, even with personal accounts being taken into account. That is an extremely sobering scenario, but, as the PPI continued:
	"In reality, employers are likely to respond in a variety of different ways."
	It referred to work done by Deloitte and Touche in 2006 showing a possible total annual pension contributions increase of £10 billion compared with a position without the reforms. However, the worrying part is that the PPI then stated:
	"But this initial increase could wane over time as employers respond to the reforms by closing existing schemes to new members".
	To adopt the expression used by the Minister in the previous debate, I do not think that there will be some big bang, with levelling down happening between one day and the next. Much more likely is that there will be a gradual process of attrition, as people move from job to job and find that pension schemes are closed to new members.
	I cannot say what will happen, and neither can the Minister or the PPI. In its written evidence to the Committee, the institute said:
	"Overall, the jury is still out as to whether the Government's pension policy will deliver both more people saving and more saving and better retirement incomes...However, the interaction of the reforms with means-tested benefits and the risks of employers 'levelling down' their pension contributions both pose real challenges to the success of the reforms."
	That expresses better than even I can the concern lying behind new clause 6 and the other amendments. No one can predict how employers will behave, so any measure that will minimise the effects of levelling down—including the duty in new clause 6 that would require the PADA itself to minimise that effect—is to be welcomed.
	A related but separate issue is covered by amendment No. 29. Much concern has been expressed about workplace pension plans and group pension plans. If a solution is not found to the problem posed by GPPs, the process of levelling down could be turbocharged. The industry consensus is that we need that solution now, not in 2012. The National Association of Pension Funds said that the EU's directives on distance marketing and unfair commercial practices may prevent auto-enrolment being applied to workplace personal pensions.
	"We believe that the UK Government should continue to seek clarification from the EU on whether automatic enrolment can apply to WPPs in the UK under the proposed reforms. However, if agreement cannot be achieved, the NAPF believes that a solution can be found that would allow auto-enrolment in to WPPs in a manageable and affordable way, by establishing WPPs under master trusts."
	The Association of British Insurers shares the concern about the present uncertainty, although its alternative solution is to institute streamlined joining for those in GPPs. Some 2.5 million people are in those pensions, making up some 40 per cent. of all employer provision, and the ABI states:
	"We are particularly keen to ensure that these schemes can be preserved within the new system as they tend to offer better arrangements to employees, and continuation will save employers from a costly and complicated review of pensions provision.
	Given the current scale of the GPP market...the potential damage to pension savings is very high."
	The association concludes:
	"Failure to secure a safe future for GPPs will prompt widespread levelling-down of pensions, something the Government is so keen to avoid. The average employer contribution to a GPP is 6 per cent. If this was reduced to the Personal Accounts 3 per cent. level, some £900 million of contributions would be lost by employees."
	That is incredibly important, as losing the more generous provision would give real impetus to the levelling-down process. The ABI goes on to say:
	"A solution must be found now—not in 2012.
	2012 is still four years away, and uncertainty in the GPP market now means that financial advisers...may hold back from recommending new schemes. The impact of this is very real, especially for middle-age savers—for a 40 year old man, such a break in saving could reduce retirement income by up to one-fifth."
	Similar concerns have been expressed by the CBI and by Norwich Union, while the Equality and Human Rights Commission said:
	"We are concerned about Clause 3(5)...We understand that the Government is not entirely satisfied that auto enrolment is currently possible into commercially based personal pensions under European directives. The Government has recognised the concern that we and others have and we urge them to continue their discussions with Europe or investigate alternative solutions such as master trusts to ensure the vital principle of auto enrolment is not breached."
	It is clear that the Government should pursue a twin-track approach on this matter. They should continue to have discussions inside the EU to see what can be done. Resolving matters such as this usually takes some time, but the Government also need a plan B in case the talks do not work out. We need a workable exemption to automatic enrolment in GPPs, so that we can get the policy aims back on track—that is, to deter levelling down of existing provision, and to encourage people to continue in the schemes and to join them in the foreseeable future.
	There is a real worry in the industry, and an uncertainty that cannot be allowed to continue. The concern is that a gap in pension provision could have a real effect on the retirement income of many people. I hope that the Minister will tell us what progress has been made with the EU, and what his fallback position is if the talks do not work out.
	The problem of levelling down is a huge one, and I commend the new clauses and amendments to the House.

Paul Rowen: I shall be brief, as the hon. Member for Eastbourne (Mr. Waterson) has covered most of the relevant points. He made the problems to do with levelling down very clear, showing that employee contributions of 6 per cent. could fall to 3 per cent. The Bill is aimed at ensuring that people who currently are not saving for their pensions begin to do so, and we do not want employers to reduce the level of their contributions.
	The number of people in the private sector with open defined-benefit schemes has fallen from 5 million in 1995 to 900,000 now, and that is a serious problem. The hon. Member for Eastbourne quoted what the ABI said about the 2.5 million people currently in GPP schemes. The ABI also showed that a person of 24 in a GPP scheme earning £15,000
	"who retires at State Pension Age would...receive an annual pension income of £10,000, compared to around £6,500"
	if he or she had a personal account. If that were to happen, it would completely defeat the purpose of the Bill.
	The Minister told me last night that he would speak today about the two EU directives that the hon. Member for Eastbourne mentioned. It is clearly important for the industry that we get a solution to the problems that they pose. If we can ensure that we are levelling up rather than levelling down, we will have achieved our purpose, and we need an assurance from the Minister to that effect. He must also make it clear that the problem of auto-enrolment is being dealt with, as the current interpretation of existing EU directives could have a devastating effect on the industry.

Michael Penning: May I say what a brilliant speech my hon. Friend the Member for Eastbourne (Mr. Waterson) made? That is not to say that he has not made brilliant speeches before. He managed to pull together a great many amendments in one speech. He said at the start of his remarks that he felt as though he were going to a scrap yard, getting several pieces of a car and putting them back together. In north London, that is called a cut-and-shut. I will deal with the cut, if that is okay.
	My hon. Friend and the hon. Member for Rochdale (Paul Rowen), the Liberal spokesman, talked about levelling down. It is imperative that that does not take place. If the Bill is to introduce new people to pensions that will get them off means-tested benefits, it is crucial that we have a level playing field. Now that we are talking about levels, it sounds as though we have moved from the car breaker's yard to a building site. As I say, a level playing field is crucial. We must give no one an opportunity to cut their responsibilities and make people who are already in pension schemes slip backwards, or to encourage those people to move into the personal account schemes that we are talking about. That is imperative; if we do not ensure that, it will defeat the whole object of the Bill and we will go backwards, not forwards.

Mike O'Brien: indicated assent.

Michael Penning: I notice that the Minister is nodding, so perhaps I have said something that we agree on. That is unusual for me.
	There are shady business men dealing with pensions all over the show. There must not be a back door; there must be no opportunity for them to slide backwards. If there is no independent way to make sure that that does not happen, it is important that the people in charge of schemes make sure that it does not happen. The Conservative and Liberal Democrat Front Benchers have spoken of the evidence that outside organisations with concerns have provided. We must put a stop to the problem, and that is why I support new clause 6. The Minister may well give us very good reasons why we should not add the new clause to the Bill, but if we do not, will he give the House, the country and, more importantly, future pensioners assurances that there will be protection for those already in a scheme?
	I am told that I pick on Tesco too often, so I shall refer not to the Tesco pension scheme, which the Minister mentioned, but to another one, on to which people are automatically enrolled; they are on very low earnings, and may be working part-time. One can easily see how that sort of scheme, which has very low premiums going into it, could easily be drawn backwards and be subject to the levelling down to which my hon. Friend the Member for Eastbourne referred, making it simpler for employers to let someone else take the responsibility. That would be disastrous for the Bill, and for the many people whom we are trying to encourage to have faith in pensions. We have to be honest with ourselves; we know from our constituencies that there is not huge faith in pensions. We know all too well how many people who come to our surgeries are concerned about the issue. That is true not just in my constituency, which has been affected by the Dexion situation and occupational pension scheme issues. Pension schemes in general are not the flavour of the month.
	The purpose of the provisions is to encourage more people to come into the pensions arena and to have confidence in pensions. If we are to do that, we need new clause 6, or something very similar that will allow people to believe that those who are already in low-income and low-premium schemes will be protected. At the same time, the personal accounts scheme that we are talking about should have the benefit of keeping people out of means-tested benefits. I accept that the Minister is in a very difficult position, as he is trying to bring that about with the consensus that he has managed to get. That would all be lost if we ignored the concerns that have been raised. I will not read out the comments of all those who have lobbied us on the issue; some of them have already been read out. There is a genuine argument to be made, and there is genuine concern that it is all too easy to slip backwards, instead of going forwards, which is what we all want to happen as a result of the Bill.

John Penrose: I want to join the consensus among Members on both sides of the House about the critical importance of preventing levelling down, and therefore of accepting new clause 6 and its associated amendments.
	It is worth pausing for a second to understand precisely what we mean by levelling down, as we have been using the term to cover a variety of things. It is worth remembering that, for several years, employer contributions to pension schemes have fallen, not because of the Government's plans for personal accounts, but because of other external factors, partly economic and partly to do with changes in pensions and tax laws. As a result, occupational schemes are already suffering from a degree of levelling down. It is crucial that we do not accelerate the decline and push contributions even further down to the residual, basic level that will be established by the personal accounts. It is crucial that the issue is not left to chance, and that we do not just trust to hope on that point.
	Let us imagine the scene in any company's boardroom when the topic of the establishment of personal accounts arises. Companies with occupational schemes could do one of four things in the face of the personal accounts legislation. They could decide not only to make their existing occupational scheme available to everybody in the firm, as the rules require them to do, but to increase the contributions for each of those people. That would be a marvellous solution; I sincerely doubt that many people will opt to do that, but it is a theoretical possibility.
	Companies could also opt to keep contributions at the same level, but to broaden coverage to everybody in the firm. That would obviously increase the total cost of the company's pensions contribution, potentially very substantially. I do not know whether that would count as remaining the same; I suspect that we should count it as levelling up, because it would extend existing high-quality coverage to more people. I suspect that everyone, in all parts of the House, would welcome that outcome hugely.
	As a third option, a company could decide to maintain its overall pension contribution at current levels, in pound terms, while spreading that benefit among a wider range of people—that is, while extending the scheme to cover everybody in the firm. That would not reduce the total pension contribution made by the company, but it would reduce the amount received by each employee. I do not know whether we are counting that as levelling down. Clearly, on a macro-economic scale, it is not levelling down, but would be maintaining pension contributions at existing levels. I suspect that many of us would not regard that as a bad result; it would extend the coverage of occupational pensions significantly, while keeping them at a high level of quality.
	The fourth option is the one that we are all worried about: a company may decide not to keep its existing level of contributions constant, but absolutely to reduce its contributions, while extending the coverage of the scheme to all employees. We need to be clear that that is the worst possible scenario. I suggest to the Minister—I shall be interested to hear his views—that any of the other three options would be at least acceptable, if not an outright victory, and would allow us to consider that we had avoided levelling down. I hope that he will oblige us by explaining precisely what he would, and would not, regard as acceptable.
	There is an argument that the design of personal accounts is, in itself, a good weapon against levelling down. Personal accounts are the budget airline solution to pension coverage; the legislation deliberately sets out to create an ultra-simple, ultra-cheap, no-bells-and-whistles, no-frills product that is not terribly flexible—a good, basic, plain vanilla product that will suit a large number of people who are not currently covered. It can be argued that that in itself will distinguish personal accounts from existing occupational schemes, because those occupational schemes tend to be higher-cost, to require higher contributions and to be a great deal more flexible. They also have a fair number of additional features that personal accounts will not have.

Michael Penning: My hon. Friend touched on an enormously important point when he used a simple analogy to explain the dangers of the scheme. Continuing the budget airline scenario, if he had said to British Airways 10 years ago, "Don't worry, your market is safe because there is no competition, and by the way, there is a budget airline that is going to do Paris for £15 and Barcelona for £14", BA would have laughed at him. What happened, as we know, is that budget airlines have been a huge success and millions of people who were flying with the big airlines and paying a fortune have gone over to those airlines. That is my fear in the pensions context.

John Penrose: My hon. Friend anticipates the point that I was coming to. There is an argument that because personal accounts are an ultra-cheap, ultra-simple alternative, they will not compete with existing occupational schemes because they are designed in a different way and they do not provide the additional flexibility and levels of outcome that occupational schemes provide. However, that assumption has not, to my knowledge, been tested anywhere. As my hon. Friend points out by using the airline analogy, it is possible that there will be a knock-on effect, as budget airlines had on full service airlines.
	My concern, and the point to which I would like the Minister to respond, is this: are we trusting to luck and hoping that the difference in design will do the trick, or do we have concrete evidence to guarantee that it will do the trick? If it does not, and we do not have that concrete evidence, trusting to the differences in design will not be enough to ensure that there is no levelling down. We will need more. If that is not new clause 6 and its associated amendments, then what is it? We must have solid guarantees or solid evidence that the differences in design will make a material difference. I hope the Minister will be able to offer us those assurances.

Mike O'Brien: Opposition Members have tabled a number of amendments for today's debate and I fully understand the concerns expressed in them. I hope I can reassure them that the Bill as drafted will achieve the outcome that they are seeking. We share the goal of more people saving for retirement, and more people contributing for longer and contributing more for longer.

Mark Hendrick: My hon. and learned Friend speaks of more people contributing—often people from very poor backgrounds. He knows that some people have been contributing to pension funds for many years, but their pension fund may go bust and they may fall ill with a terminal illness. That is a serious matter, which new clause 22 deals with. I am concerned that we might not reach that proposal in the course of the debate. What is his opinion on the situation that I described?

Mike O'Brien: I do not know whether we will be able to debate that new clause, given the issues before us, but I assure my hon. Friend that I am very conscious of the concerns that he expresses about people who find that they have a terminal illness and are unable to make a claim on the Pension Protection Fund if their pension scheme has failed and they are under the prescribed age. I propose to suggest an amendment in due course, to be tabled in another place, in order to ensure that those who are affected in that way can get some sort of help. The aim would be that provided they could show that they meet certain conditions, they would get some significant payment to help them through the difficulties that they faced.
	We all want to achieve the aim of getting more people saving, but we need to address the issues arising from the combination of individual inertia and commercial viability, which have resulted in large numbers of moderate to low earners currently not saving enough for their retirement. The Bill provides for the establishment of what has been described as a budget airline type of pension scheme. I am not sure whether I want to follow that analogy too far— [Interruption.] The hon. Member for Hemel Hempstead (Mike Penning) suggests that all the budget airlines have been successful, but Freddie Laker might have disagreed.
	We want to provide a basic scheme that will be of sufficient quality to enable people to save for their future and provide them with a reasonable income. The key problem is what happens in relation to the current better employers' schemes—not all of them are better—where the employer may be making a bigger contribution and may find that with personal accounts, the minimum contribution will cost him less. The employee may even be making a bigger contribution to an existing scheme and may find a smaller contribution to a personal account temporarily advantageous to him and his family.
	How are we to prevent levelling down? The straight answer is that we cannot prevent it. We can reduce the likelihood that it will happen and take reasonable steps to mitigate the factors that might cause it. We have already discussed one of the ways of doing that: restricting transfers in and out of personal accounts. Someone with a current pension scheme will not be able to transfer in at the start of personal accounts in order to level down. Also, we are not looking to have people transferring out of personal accounts. Preventing people messing about and transferring in and out is a mechanism to reduce the likelihood of levelling down.
	Also, there is a maximum contribution annually that people can make—£3,600. Many people will want to make a higher contribution, but we have indicated that on 2005 figures that is the level of annual contribution that we want. We have carried out surveys of employers to ask what they are likely to do if they have the option of continuing with their current scheme or moving to personal accounts. Surveys suggest that most employers would stick with what they have. No doubt some employers will see an advantage in levelling down, and I cannot give the guarantee that the hon. Member for Weston-super-Mare (John Penrose) seeks from me, that it will not happen. However, the scheme designs that we have put in place will reduce the likelihood of its happening and hopefully mitigate the possibility of its doing so on a significant scale.
	The other way in which we have tried to deal with the matter is keeping the scheme simple. The hon. Member for Weston-super-Mare said that it was important to keep these things simple, and I agree entirely. So does Paul Myners, the chairman of the Personal Accounts Delivery Authority. In his evidence to the Committee, he said:
	"Keeping it simple is critical to the successful delivery of personal accounts. Every further bell or whistle that is added to the scheme will have to be paid out of people's retirement income." ——[Official Report, Pensions Public Bill Committee, 15 January 2008; c. 8, Q33. ]
	That is exactly right. It is a view that is broadly shared. It is also one of the ways in which we can reduce levelling down. People have requirements from their pension scheme. If the scheme on offer is kept simple, and if it will provide some of the bells and whistles with a higher contribution, we envisage that they are likely to stay with it.
	The hon. Member for Weston-super-Mare asked how we would measure an acceptable outcome. We want to ensure that we get considerably more people saving. The aim—we need to look at the ambitious end—is to have up to 9 million more people saving, and up to £10 billion more saved. If, as the hon. Member for Eastbourne (Mr. Waterson) has suggested, more people were saving but no more was being saved, it would not be a successful outcome. We need more to be saved, and we need more people saving. We need outcomes where pensioners are basically better off, which is why we are all involved.
	The Bill makes it clear that PADA is primarily tasked with setting up the scheme. The principles provide the operational framework within which it will carry out that task, and they are fundamental to how it will design the scheme. The hon. Member for Eastbourne has acknowledged in the drafting of new clause 6 that the authority cannot be tasked with achieving each principle in absolute terms. The principles are there to guide it in setting up the scheme.
	The combined effect of the principles and the package of proposals elsewhere in the Bill is to focus personal accounts on the target group I mentioned and to provide safeguards in scheme design that will minimise adverse effects on existing good-quality provision. In setting out those principles, we are asking the authority to consider the effect on future members of the personal accounts scheme, the overall additional burdens on employers and the impact on the broader pension industry, including members and prospective members of qualifying pension schemes.
	We must be realistic. Inevitably, there will be competing priorities, and the authority will need to make judgments about the suite of principles that it needs to deal with to provide the best solution in the circumstances, which is why we have used the phrase "have regard to". For example, the authority will need to evaluate the various options for investment fund choices in the light of members' preferences for fund choices and membership costs. It will need to consider the options carefully, so that the provision of investment choices does not get in the way of our aspirations for a low-cost scheme.
	Clearly, we cannot predict precisely how individuals, employers and industry will respond to the introduction of those reforms. We are seeking to ensure, in so far as it is possible, that we get the best impact out of personal accounts without experiencing the problem of levelling down. It is an important issue, which is why we have always made it clear that personal accounts are being introduced to complement, rather than replace or undermine, other good-quality pension provision. The Bill will introduce an additional pension product.
	This is the core of our ambitions, so the principles require the authority to have regard to encouraging and facilitating participation across the qualifying schemes. When Tim Jones gave evidence to the Pensions Bill Committee, he discussed the gap in the current pensions market, stating that
	"the market correctly recognises that it is a very difficult sector to address because of the very large number of small employers and the costs of approaching it".
	He made clear the authority's role, saying:
	"It is our job to address that target market". ——[Official Report, Pensions Public Bill Committee, 15 January 2008; c. 17, Q21 .]
	We are focusing on the target market. However, other individuals who are not quite in the target market, such as the self-employed, may find in particular circumstances that they want to contribute as both an employer and an employee and build up a pension pot and personal accounts. We are happy for the self-employed to do that.
	There is an issue about people who are not employed. At the moment, they would not be able to use personal accounts. We want to see whether we can get a situation where we can prevent levelling down and make sure that we keep the current provisions for employers, so pension schemes continue. There is an element of employer inertia as well as employee inertia—we expect most people who are in pension schemes to stay in them. Employer inertia means that if an employer has got a pension scheme, we expect them by and large to stick to it.
	On workplace personal pensions, amendment No. 29 relates to the treatment of insurance-based products. I want to make it clear that that is an issue for Ministers and Parliament to decide and does not relate to PADA principles. Workplace pensions are an important and growing part of the pensions market. As the hon. Member for Eastbourne has said, membership of workplace personal pension schemes forms around 47 per cent. of current private sector pension membership, which represents around 3.3 million employees involving a total contribution of around £6.7 billion each year. There are 2.1 million members of workplace pension schemes with an employer contribution of 3 per cent. or more.
	We are currently in the process of seeking clarification from the European Commission that from 2012 automatic enrolment into workplace personal pensions is compatible with European consumer protection legislation. We continue to support the Pensions Commission's aim of automatic enrolment across all employers and all workers, and we hope that the work that we are doing with the European Commission will allow us to maintain that position. However, it is difficult to be precise about the timetable for resolving this issue with the European Commission. It is therefore essential that we retain flexibility within the discussions with the Commission. That is why we have a provision in the Bill to enable us to create an exemption, as the hon. Member for Eastbourne has indicated, from the employer duty automatically to enrol employees using workplace personal pension plans. If activated, that exemption would provide employers who meet the prescribed requirements and offer their jobholders membership of a qualifying workplace personal pension with relief from the duty automatically to enrol, provided that they use an enrolment process prescribed in the regulations.
	The issue is difficult, and I am grateful for the way in which the hon. Members for Eastbourne and for Rochdale (Paul Rowen) have approached it—I have briefed them privately on the situation in more detail. I am also grateful for the contributions from a range of stakeholders outside government, including the Association of British Insurers, the National Association of Pension Funds, the CBI and the People's Pensions Coalition—we all share the same aim. There is, as the hon. Member for Eastbourne put it, a plan B, but I would rather stick with plan A and see whether we can deliver it.

Nigel Waterson: I am grateful to the Minister for his summing up, particularly his helpful summary of amendment No. 29, which raises some important issues. On levelling down, I am pleased that he has conceded that the aim is to produce not only more savers, but more savings. We must keep our eyes on the ball, because it would be an utter disaster if we were to end up with the same amount of savings or, even worse, with the Pensions Policy Institute scenario in which fewer savings are redistributed around the system.
	I do not know whether I always talk about budget airlines when I compare the personal accounts system with other pensions—it is, perhaps, the vanilla option. It is important to keep in mind that it is designed to do something for people without any provision at the moment. The Minister said that we cannot prevent levelling down. Technically, that is true, but it is equally true to say that at the moment there is nothing stopping levelling down from happening. The real concern is whether the introduction of personal accounts will encourage levelling down when it is coupled with other issues, such as the pensions regulator's consultation on longevity assumptions. One of the PPI scenarios is absolutely disastrous: the one that shows personal accounts reducing the pensions savings pot, which would be an appalling result. It is important to raise that issue, which is one of the twin major concerns behind the Bill in not only our view, but that of many other people.
	The debate has been useful. The issue is ongoing and we will continue to debate it. No doubt the Minister will have more news for us in due course about group personal pensions. In the meantime, I beg to ask leave to withdraw the motion.
	 Motion and clause, by leave, withdrawn.

New Clause 7
	 — 
	Earnings link

'Before the coming into force of this Act, the Secretary of State shall announce to Parliament his intention as to the timing of the implementation of section 5 of the Pensions Act 2007.'.— [Mr. Waterson.]
	 Brought up, and read the First time.

Nigel Waterson: I beg to move, That the clause be read a Second time.

Madam Deputy Speaker: With this it will be convenient to discuss the following:
	New clause 16— Earnings link —
	'The Secretary of State shall announce to Parliament his intention, as to the timing of the implementation of section 5 of the Pensions Act 2007, no later than the publication of the Pre-Budget Report for the financial year 2009-10.'.
	New clause 21— Uprating pensions in line with earnings —
	'The Pensions Act 2007 is amended as follows—
	"In Section 5, subsection 4, delete from 'means' to end and insert 'the tax year beginning 1st April 2009'.".'.

Nigel Waterson: We come to one of those totemic pensions issues. Whatever audience I am speaking to in whatever part of the country, somebody will always raise the issue of the earnings link and its breaking in 1980. I could go into a history lesson about why that happened when it did, and talk about the fact that the earnings link was a relatively new concept that had been around for only a few years before the change. However, doing so would not be particularly profitable.
	What is important is that there is now a consensus that the earnings link for the state pension should be restored. Indeed, I remind hon. Members that that was in our manifesto at the last election. Now that the Government have joined that consensus, nobody is arguing the opposite—except conceivably, I suppose, the Liberal Democrats, who are still peddling their citizens pension concept. We will no doubt hear more about that in a little while.
	This debate is particularly timely, given that issues of pensioner poverty are very much at the forefront of the news. There is, of course, the controversy over the 10p rate of income tax and the effect on some 5.3 million people, a significant number of whom are pensioners, particularly women pensioners. There is also a question of whether the official inflation rate is relevant to pensioners. Some experts think that pensioners face a rate of inflation that is more like 9 per cent. because such a large proportion of their income is devoted to utility bills and council tax, which has gone up by 120 per cent. in my constituency in the past 10 years.
	The other day, during Work and Pensions questions, I made the point that a significant and growing number of pensioners are using their winter fuel allowances to pay for soaring council tax bills and basic foodstuffs. I also made the point, although it seemed to annoy the Minister somewhat, that, according to the latest European Union figures, Britain is fourth from bottom of the poverty league in Europe and that only pensioners in Spain, Latvia and Cyprus are more likely to fall into poverty.
	Given that restoring the earnings link is a matter of consensus, its time has presumably come—the Government should certainly consider it seriously. What is their current position? Their stated position is that they intend to restore the link
	"subject to affordability and the fiscal position"
	in 2012. At the very latest, the link will be restored
	"by the end of the next Parliament"—
	that is, by 2015.
	It is important that I come back to a point that I made in a different context a little while ago about the Turner package of reforms that has emerged from the Pensions Commission: there is always a danger in decoupling the provisions. It is important to remember that Lord Turner and his colleagues proposed that uprating should begin in 2010.
	The feeling in the Conservative party—and in others as well, it would appear—is that the time has come for Ministers to make a decision on when the restoration of the link will take place. Will it be in 2012 or 2015? Is the get-out clause of affordability still relevant, and is it likely to become more relevant as the economy moves in a downward direction?

Kate Hoey: It is always good to hear politicians admit that they were wrong, and the Conservative party has admitted that it was wrong to take the link away initially. If there were a Conservative Government in the next two years, would they be committed to restoring the link immediately?

Nigel Waterson: We are, of course, not committed to restoring it immediately, because we are currently in opposition. We hope that, by the time of the next election, the Government will have come clean about when they are going to restore it. I cannot say what will be in our next manifesto; all I can do is refer the hon. Lady to our last manifesto, in which we did promise to restore it. The message is clear. If people had voted in a Conservative Government at the last election, we would already be implementing the measure. Incidentally, I did not admit that we were wrong to break the link; I just said that I would not go into the history.

David Drew: I thank the hon. Gentleman for being so generous. Given that the Conservatives made such a commitment in their last manifesto, they have obviously done calculations on the anticipated cost. One has to roll that forward, and it would be useful to know what—

Madam Deputy Speaker: Order. I remind hon. Members that we are discussing new clause 7.

Nigel Waterson: I am delighted by all this close interest in our next election manifesto. When the time comes, the hon. Lady and hon. Gentleman will be among the first to know.
	I, however, am talking about this Government and the Turner package. The more we read and reread the final report of the Pensions Commission—one has nothing better to do, I suppose—the more it is clear that all these things hang together, including, as I said earlier, increasing the state pension age. One can see the arguments for that in isolation. However, these matters were not proposed in isolation. They formed a carefully organised package of measures, including restoring the state pension's link with average earnings.
	What makes it easier for Ministers is that we have already legislated on the issue. The great thing about this job is that another pensions Bill is always just around the corner. Section 5 of the Pensions Act 2007 sets out the mechanism to restore the link and how that could be calculated. No further legislation is required and no Government time in the House need be allocated. That being the case, why have the Government been so coy about making the announcement? One has to wonder whether they propose to go into the next election campaign without making it. To follow up the point made by the hon. Member for Vauxhall (Kate Hoey), whatever may or may not be in our manifesto, I have a sneaking suspicion that, one way or the other, the issue will be in the Government's next election manifesto.
	Given that pensioner poverty is on the front pages and an issue in our advice surgeries and mail bags to such an extent—because of the other issues crowding in on the already stretched budgets of pensioners—why do the Government not say something now? That is the point of new clauses 7 and 16, which are almost identical in what they are trying to achieve.
	Help the Aged's briefing on the debate says:
	"Help the Aged therefore supports the amendments brought forward by Kate Hoey MP to bring forward the planned date of relinking pensions to earnings."
	There is no credit for us, but there we are. There is a general feeling that the issue needs to be tackled, and tackled soon so that people at least know where they stand. The National Pensioners Convention has made the point that, sadly, some 3 million pensioners will have passed away by 2015. Even if the Government are not going to restore the link tomorrow or the day after, giving people the certainty of knowing when they intend to do it would be welcome.

John Butterfill: If one were feeling very cynical, one might think that the link with earnings, as opposed to prices, rather depends for its efficacy in delivery on whether prices are going up faster than earnings or vice versa. Perhaps the Government cannot make up their mind about which will go up faster and are hedging their bets.

Nigel Waterson: As my hon. Friend says, one would have to be cynical to take that view. I could not possibly comment, save to point out the historical fact that one of the myths surrounding the earnings link is that pensioners were worse off for ever after 1980 because their pensions were not going up in line with earnings, whereas there were years when prices were roaring ahead, until we got them under control.
	If there is a legitimate reason for holding up this announcement, it can be only because of the Government's worries about the economic and fiscal future over the coming months and years. They have done their sums on what all this would cost; those figures are in the public domain and have been for some time. If Ministers now feel that it will not be affordable because of other problems in the economy, they should come clean, as well as telling us why they will not make the announcement at this precise moment.
	There is so much consensus on this issue that there is almost identical drafting between our new clause 7 and new clause 16, which was tabled by the hon. Member for Newcastle upon Tyne, Central (Jim Cousins), among others. On reflection, I am more attracted to his new clause than my own. It was my intention, subject to what else might be said in the debate, to withdraw new clause 7, but to seek, if possible, to press new clause 16 to a Division. I will be interested to hear whether the hon. Gentleman is sufficiently reassured by the honeyed words of the Minister not to wish to press new clause 16, but even if he were, perhaps I may say at this stage that I would intend to seek permission to do so myself.

Paul Rowen: 1 August this year represents the centenary of the introduction of the state pension. I can think of nothing better that this Government could give people than for a Minister to be able to announce, when we go to the TUC national pensioners convention in Newcastle in June, that the Government are restoring the earnings link.
	That would only be a first stage in restoring the value of the pension to where it should be. However one looks at it—I quoted these figures in the debate on the National Insurance Contributions Bill last December—the value of the pension as a percentage of earnings has declined. In 1950 the pension was worth 18.4 per cent. of average earnings; today it is worth 15.9 per cent. When we look around Europe, as the hon. Member for Eastbourne (Mr. Waterson) said, we see that we are the poor relation. Why should we be compared with the likes of Cyprus and Latvia? We consider ourselves to be the fourth largest economy in the world, yet we are unable to give our pensioners a decent state pension. Our state pension is worth only 45 per cent. of pre-retirement earnings compared with 57 per cent. in Germany, 75 per cent. in Poland and 105 per cent. in the Netherlands.
	It is high time that the Government restored the link and got the value of the pension back to what it should be. I know that the Minister will reiterate, because we hear it whenever we raise this issue, "Well, there's pension credit," but as he knows, 40 per cent. of all eligible pensioners do not claim that. It is also far more expensive to administer. It is much easier to give people what they are entitled to, and have earned, without making them go through what many of them perceive to be a demeaning process of being means-tested to get what they have worked for all their lives.
	We should be doing this. We have had a commitment from the Government, but it is open-ended. We want to set a date. As the hon. Member for Eastbourne said, this provision was agreed in last year's Pensions Bill. The Minister will ask how it is to be paid for. National insurance contributions are in credit at the moment, and there is absolutely no reason why that surplus money cannot be used to restore the link. It can happen now, and I want the Government and the Minister to give a clear indication that it will. If we vote on nothing else tonight, we should divide the House on this new clause to see whether the Government's commitments and promises are more than warm words. I give notice that if neither new clause 7 nor new clause 16 is pressed to a vote, we will want to press our new clause 21, because we believe that the Government have had enough time to deliver on this commitment, and we want to see it implemented now.
	As I said, this would only be the first stage. We want a citizens pension. Instead of setting the bar at which pensioners can have an income at £30 below the poverty line, as is currently the case, that bar should be set at the poverty line. The Government have made a commitment on child poverty. It is a testing target, but in the last two Budgets they came forward with proposals showing that they are delivering. Why can the Minister not deliver on this promise? These people have worked all their lives for us; many of them fought during the second world war to ensure that we could be here now. They deserve that right. It is wrong to say that another 3 million of them are going to die before the promise is kept. It must be kept now, as is appropriate in the state pension's centenary year. The Minister could not deliver a better speech at the TUC national pensioners convention in the constituency of the hon. Member for Newcastle upon Tyne, Central (Jim Cousins) than to say, "We've delivered on our promises."

Jim Cousins: Let me begin by saying that nothing is more glorious to God than a sinner that repents, even if, as in this case, the sinner is a Conservative. If we have achieved consensus on this issue, now is a good moment to put that into effect.
	I pay great tribute to my right hon. Friend the Member for Barrow and Furness (Mr. Hutton), because in many respects the package consisting of this Pensions Bill and the Pensions Bill that preceded it last year is very much his package, implementing the findings of the Turner commission. I have no doubt that he saw the restoration of the earnings link as being a vital part of that package. In his opening statement on these issues, he referred to the long-term damage caused by the eroding effects of our present system of indexation of pensions. The restoration of the earnings link is an absolutely essential component of the credibility of the Government's new pensions proposals in the Bill regarding personal pension accounts. The credibility of personal pension accounts depends on the restoration of the earnings link so that people are assured that they are not paying money into a scheme whose ultimate effect will be simply to save the Government money, in the form of the benefits that they would otherwise have received.
	Another important part of the package is that by restoring the earnings link we build a bridge between tomorrow's pensioners, who we hope will benefit from the introduction of personal pension accounts, and today's pensioners, who in every other respect do not benefit from the proposals in the Bill. The restoration of the earnings link must not be delayed. It is essential for the delivery of the Government's pension reform package, and it must not be subject to the daily volatilities of the political and economic environment in which we all operate.
	The hon. Member for Eastbourne (Mr. Waterson) mentioned that for the Government the reintroduction of the link to earnings would be subject to affordability and the fiscal position. The current situation is a little different from the one that we were in last year. There is more uncertainty about the fiscal position of the Government, and when we see their accounts at the end of the financial year, we will see, rather remarkably, that they have observed their fiscal rules simply because a large number of people who were entitled to means-tested benefits did not claim them, thus saving the Government money. That is a difficult situation for any Government.
	The point must be made that the longer the restoration of the link with earnings is delayed, the more today's pensioners will end up in relative hardship and depending on the complex rules of pension credit. Indeed, the provision in the previous Pensions Act that pension credit should increase in line with earnings, even when the basic rate of state pension does not, has now become a machine that remorselessly, year by year, draws larger numbers into a state of dependency on means-tested benefits. Once they get there, there is no possibility of retrieving the situation. Parliament should not allow that to continue.
	Of course, we ought to seek simplification of tax and pension credits. We may well have an opportunity to consider some of those issues quite soon, which would be welcome. But in the meantime, we have to protect people from being drawn into dependency on means-tested benefits where that is not necessary. Let us recognise that the people who do not claim the means-tested benefits to which they are entitled are often old people—often women—who live on their own in social isolation. It is entirely wrong that we should not move to protect such people.
	A commitment to link pension credit to earnings, and to set a date for the announcement before the next general election, not after it, is absolutely necessary. That is the purpose of new clause 16, which will also have another benefit. If it is adopted in the launch period leading up to the introduction of personal pensions accounts, when people read about those accounts in the newspaper and the financial sections of the popular press, they will be reassured that they are reading about a valid, reliable, predictable and sound addition to their ultimate savings and income. If we fail to act quickly, many younger people will for years—perhaps for ever—be put off the new pension system we are trying to put in place.
	I welcome the fact that the hon. Member for Eastbourne has decided not to press new clause 7 to a vote, because it would tie the hands of the Government too tightly. It would mean forgoing some of the other benefits in the Bill to which we have not referred this afternoon, such as the introduction of a much longer assessed income period for people who are on pension credit. That provision was in clause 81 of the original Bill—I am afraid I do not know what clause it is in now. I would not want to forgo such provisions, which would be a consequence of the hon. Gentleman's new clause.
	It is the right moment to reconsider this issue. We should reconsider it before the next general election, not after it. Indeed, when the Government originally said that they would consider the issue early in the next Parliament, many people, including myself, assumed that that next Parliament would be rather closer to us than it now seems to be. That is another reason for trying to reconstruct the terms of the debate as my right hon. Friend the Member for Barrow and Furness left it. I offer new clause 16 to the House in the name of myself and my hon. Friends. We have discovered during recent days that as Back-Bench Members of Parliament, we are a very low form of life.

David Drew: Life?

Jim Cousins: It is better than the alternative.
	We are a fairly low form of life, and the accusation is often made that we fail to spot issues at the right time, and that we fail to press matters to a conclusion when it is right and proper to do so. I look forward to hearing from my hon. and learned Friend the Minister; I hope that he will completely reassure me. I ought to let him know before he speaks, however, that I have learned during the past few days that if an issue arises and we do not press it to some sort of conclusion, we may be making a grave tactical error. I do not wish to make that mistake. As a Back Bencher, I have two alternatives: to try to cut a deal, or to put down a marker by having a vote. That is my position and that of my hon. Friends right now. I look to my hon. and learned Friend to reassure me and guide me in the right direction.

Kate Hoey: I shall be very brief, because I have lost my voice, but I wanted to add my support to new clause 16, in the name of my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins), to which I too have put my name.
	It is good to see so much unanimity in the Chamber. The only people who are not part of it are probably the Minister and the Whips on the Front Bench—but I hope that we shall hear something different. I am sure that the Parliamentary Private Secretary is a great supporter of this idea, but he is in a difficult position. I hope that the Minister will listen to our reasoned proposal—one that sends a signal that we mean what we say. We mean to restore the link before the point when many people who are now pensioners will not be around to see it happen. As has already been said by the hon. Member for Rochdale (Paul Rowen), to do so in this centenary year would be a remarkably well-chosen and well-received statement of this Government's commitment to pensioners, and all that they have done.
	I hope that no one will say that we cannot do this because we cannot afford it. We can afford it, and we can afford to do it soon. It is crucial that the announcement be made as soon as possible, so that we go into the next general election knowing that we have done what we said we would do.

Kelvin Hopkins: I, too, rise to support my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins), who spoke in moderate and reasonable terms. I only wish that I could be as moderate and reasonable, but I feel passionately about this matter, and I believe that it is time that we put our house in order on pensions.
	The point has been made that many of today's pensioners will die before the link is restored, even if it is restored in 2012, although according to the qualifications even that is not definite. It could happen at the end of the next Parliament—we all hope that Labour will be returned to power—and that could be as late as 2015.
	Also, as my hon. Friend said, if the link is restored later, the plateau at which it is restored will be lower, so more people will have been drawn into means-tested components of the pension, which is unacceptable. The earlier the link is restored, the higher that plateau will be.

Lynne Jones: In response to my earlier intervention, the Minister said that if the earnings link was not restored, 60 per cent. of pensioners would be subject to means-testing. That is bad, but surely the current situation is unacceptable, too. We cannot wait until 2012.

Kelvin Hopkins: My hon. Friend is right, but I would go further. I do not agree with means-testing as part of the pension. I want it eliminated entirely, with a quick restoration of the pension for everyone, to at least the minimum poverty level and beyond. We ought to consider restoring the pension for all to the level that it would have reached had the earnings link not been broken. That means that the pension would be roughly 25 per cent. of average earnings—40 per cent. higher than the current level. Even then we would still have one of the lowest pensions in the whole of Europe, and certainly in western Europe. Our basic state pension is disgracefully low. We must do more than just restore the link; we must go beyond it and look towards a much higher, non-means-tested basic state pension.
	I have made that point a number of times, and time and again I have heard about affordability. As I have said in such debates before, when my children were young my son would occasionally ask for another ice cream. My wife would say, "But mummy can't afford it." What she was saying was not that she could not afford another ice cream, but that she chose not to pay for one, because she did not want him to have one. Affordability is something that we can decide. We can decide that something is necessary and make the necessary payments for it.
	The basic state pension is far too low. It should not be means-tested and it should never have had the link with earnings broken. I want our Government to start building towards a much more decent state pension for the future.

John McDonnell: I rise only because my hon. Friends have been so moderate in their language. I want to get on the record the strength of feeling on the matter. I do not think that the Government have recognised the grievance and anger that pensioners in our communities feel. I still find it astounding that after 11 years of a Labour Government 2 million pensioners are living in poverty, partly because they cannot find their way through the labyrinthine system to the income, benefits and credits to which they are entitled, in order to take them out of poverty.
	When Labour was in opposition and Mrs. Thatcher broke the link, I can remember campaigning on the streets, exposing what would happen. My hon. Friend the Member for Luton, North (Kelvin Hopkins) has demonstrated that the income going to pensioners has eroded over time—now they are losing out on £30 a week at least—and that that has impacted on their standard of living, exactly as we predicted. I do not know what other hon. Members have experienced in their constituencies, but I have met pensioners who at times forgo turning on their heating in winter, even with the fuel allowances, who do not live on diets that we would expect the average person to enjoy, and who are cutting their quality of life as a result of not receiving an adequate income. Part of the reason, exactly as has been explained, is that we are forcing such pensioners on to means-tested benefits.
	When we raised the issue with the Chancellor of the Exchequer, now the Prime Minister, the argument was, "Well, tax credits are there, and even though it's complicated, there'll be advisers in the Department for Work and Pensions who'll be able to assist them in claiming those benefits." But those advisers are not there, because we have just sacked 30,000 of them. That assistance is no longer there for many pensioners, who struggle to understand the system and as a result struggle to gain the necessary income.
	I do not understand what is preventing us from making an announcement to address the issue. I would like that done tonight, and if not, at least for the Minister to give us a time scale over the next six months. The arguments might be about financial costs, but the estimate is £300 million to £400 million a year. The surpluses in the national insurance fund have already been mentioned. It is ironic that we can find up to £100 billion overnight to bail out banks that have speculated, received massive bonuses and made significant amounts from profiteering, yet we cannot find a relatively insignificant sum for pensioners—I do not even want to talk about what we are spending on wars, in Iraq and so on. Those are the issues that pensioners put to us when we are on the stump: that we can find resources for non-productive expenditure, but that pensioners always seem to be last in line.
	I would like to hear the clear message from the Minister tonight, which we can take back to the National Pensioners Convention and other pensioner organisations, and to pensioners in our constituency, that we will redress the wrong once and for all, and do so expeditiously. Otherwise, people will feel a sense of betrayal. We said in opposition that we would address the issue, but 11 years' wait is too long. We have tried the patience of our supporters in the pensioners movement who put us into government in 1997 and have supported us since. I hope that we get a clear message.
	I congratulate my hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins). If he presses this matter to a vote, I will march proudly through the Lobby in support of new clause 16 and in support of pensioners in this country.

David Taylor: My hon. Friend congratulated our hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins), who brought to the surface the fact that the tax credit argument does not work, because of the high level of non-take-up, particularly at the older end of the spectrum. Is my hon. Friend attracted by the idea of the Government announcing tonight that they will increase the additional pension at 80, which currently stands at 25p a week, by £8 or £10 a week, as an inexpensive interim gesture of good will? That would be affordable and would help to hold the fort for some of our oldest pensioners.

John McDonnell: I am indeed attracted to that idea, because I suggested it in the Budget debate last year and the year before.
	On the issue of non-take-up, I have met the staff of the Public and Commercial Services Union who administer such schemes. Part of the problem—I return to this—is that we have identified a consistent level of non-take-up over the past five years of between 38 and 40 per cent. That is a result of the complexities of the system, but hon. Members should also not underestimate the stigma that is still attached to means-tested benefits. People do not want to sit down and display all their private income and private doings. As has been mentioned, we are talking about a generation who have a fierce sense of pride. They are right to be proud of what they have gone through, in constructing the welfare state after the second world war and giving most of us the opportunities that we have taken, from a decent education system, a decent health system, housing and so on. They have a sense of pride in what they have achieved and they do not want to be demeaned by being forced through the means-testing system. As has been pointed out, we now face the prospect of 60 per cent. of them being forced into that process if the system continues as it is.
	I appeal to the Government tonight to give us a definitive statement. Let us expedite this matter and put it to rest. Let us right the wrong that the previous Conservative Administration inflicted on our community.

Michael Penning: I want to talk briefly about what the hon. Member for Hayes and Harlington (John McDonnell) mentioned a moment ago: the question of pride. Sadly, I lost my grandfather last year. He was 93 years of age. He had never in his life had what he described as a handout until he became a pensioner. Then, he was expected to go cap in hand and ask for a benefit. Why should that be? This is not just about pride or about opening up one's documents; it is not just about complicated forms. It is about the simple principle of what that generation paid in and what they are entitled to. I was not a Member of Parliament when we broke the link—I think that I was still serving in the armed forces at the time—but I am proud that my party has accepted where we need to be today.
	The delay worries me enormously, however. The actuaries in the Department know full well what is coming. They know full well that, as incomes drop as we get into a difficult economic situation, the gap will close. So, if and when this measure eventually comes through during this Parliament, the cost implications will be even greater. We might even find ourselves in a situation in which more people— [ Interruption. ] The Government Whip makes a comment from a sedentary position. He did not have the guts to have a moan at the Labour Members who had the courage to stand up for their constituents, but he thinks it is quite funny and jovial to have a chirp at a Conservative MP for standing up for the pensioners in his constituency. I am proud of my constituents. I am very proud of my grandfather, who would not go cap in hand to get a mean-tested benefit. He survived in his own way and worked until he was in his early 90s.

Jim Cousins: May I urge the hon. Gentleman not to provoke the Whips Office? There is absolutely no need to do so. The Whips have been entirely reasonable today, and if he provokes them, goodness only knows what will appear in next Sunday's newspapers.  [ Laughter. ]

Michael Penning: As a humble Back Bencher with not much experience in this House, I will bow to the hon. Gentleman's experience. I will not provoke the Whip in the House again, but privately, behind the Speaker's Chair, I shall tell him what I think of him.

Mike O'Brien: In 1997, we inherited a system that worked against the needy, leaving millions in abject poverty. Many were forced to get by on just £69 a week. There is never enough money to sort out all the problems and ensure that everyone is given the resources that they would wish to have, but this Government have made it a priority to help all pensioners through a number of policies, and in particular, to lift the poorest pensioners out of poverty. We have succeeded in lifting 2 million people out of poverty, and that is a significant achievement of which we can be proud.
	Today, no pensioner need live on less than £124 a week. The figure is £189 for a couple. In 1997, the state pension did not recognise the important contribution of women and carers. In private provision, millions of employees, especially those on low incomes, did not have access to a workplace pension scheme. They were therefore likely to have to rely only on the state pension in retirement. We are tackling some of these issues with a historic series of social reforms which have to be seen as a whole. We have created the Pension Protection Fund and the Pensions Regulator, and made changes so that the state pension provision gives equality to women and carers, and we accept that those will have significant costs to the Exchequer.
	An essential part of those changes is to restore the earnings link. My hon. Friend the Member for Newcastle upon Tyne, Central (Jim Cousins) was absolutely right to say that the provisions in the Bill are dependent for their success on the restoration of that link. The figures that I cited earlier were an understatement. It is actually the case that, unless we restore the link to earnings, we will end up with up to 75 per cent.—not 60 per cent.; I was saying that from memory—on means-testing. Restoring the link will reduce the number on means-testing and increase the number who are able to benefit by having the basic state pension as the basis of their retirement income. Those who are on pension credit will be reduced to about 30 per cent. by 2050.
	We are hoping to put together a package which, as result of these changes, will ensure that pensioners have a better deal in the longer term. My hon. Friend is absolutely right to say that the Bill should be seen as a whole and that the restoration of the earnings link is an essential part of the package that will ensure that pensioners get a better deal in the long term.
	If we had continued the policies of the previous Conservative Government and continued to pay people the kind of appalling basic state pensions that they were paying, we would—if this had been only about money—have had £11.5 billion to spend on something else. However, we chose to spend that extra money—in addition to the money already being spent: a total of £76 billion—on pensioners, because we regard them as a priority. I wish that we could suddenly come up with more, but we cannot. What we have to do is manage this process and put in place a series of reforms to secure a better situation in the long term for pensioners in this country.
	We made a legislative commitment in the Pensions Act 2007 to restore the link. We have put beyond doubt our intention to restore it. During the next Parliament, we will re-link the uprating of the basic state pension to average earnings. Our objective, subject to affordability and the fiscal position, is to do that in 2012 or, in any event, by the end of the next Parliament at the latest. That is the bedrock on which our reforms are built, and its introduction is non-negotiable.
	We have always said that, in uncertain economic conditions, we need flexibility around the timing of the introduction of the link, and colleagues will understand the circumstances and conditions that I am talking about today. The Pensions Commission has said that a short delay would not unduly affect the outcomes of the reform package. We need to take the right decisions for pensioners, for taxpayers, for the economy and for the long term. We have to balance all these things.
	My hon. Friend has requested a decision on the earnings uprating in the pre-Budget report, and we have discussed the importance of keeping an eye on affordability and on the fiscal position, and on taking the right decisions for pensioners, for taxpayers, for the economy and for the long term. I understand the keenness to hear the date of the introduction of the earnings link. Let me put beyond doubt our commitment to reinstate the link. That is not just my guarantee; there is a legal obligation, and we will stick to it. [Hon. Members: "When?"] I have already said that it is our objective, subject to affordability and the fiscal position, to do this in 2012 or, in any event, by the end of the next Parliament. That is what Ministers have been saying very clearly, and I have gone further today by making it clear, as a result of the contribution by my hon. Friend the Member for Newcastle upon Tyne, Central, that we see the restoration of the link not just as something that is desirable in itself—because that lot got rid of it, we want to restore it—but as part of a broader package of which it is a foundation stone.

Kate Hoey: I understand what the Minister is saying, but referring to the point raised by my hon. Friend the Member for Luton, North (Kelvin Hopkins), will the Minister tell us in a simple way what he means by affordability?

Mike O'Brien: My hon. Friend has been a Member long enough to know that what happens in the Budget and, for that matter, the pre-Budget report is that the Chancellor looks at the public finances, the state of the economy, what income he has coming in and what extra expenditures, if any, he is able to provide. He has to make a judgment—

Paul Rowen: Will the Minister give way?

Mike O'Brien: Just a moment; let me deal with my hon. Friend's question. The Chancellor has to make a judgment about the appropriate time to take certain steps. In this case, unlike any other I can think of for the moment, we have made a statutory obligation, binding the hands of the Government at a future date, to take a step that they must take. We have taken that unprecedented step because we regard it as so fundamentally important to the structure of the pensions reform programme that we are undertaking.

Paul Rowen: Will the Minister tell me why, if the national insurance fund is in surplus, there is a problem with affordability? Surely he could deliver it now.

Mike O'Brien: Although the national insurance fund gets money in, it would not be sufficient to deal with the particular expenditures going out as a result of the change. That will have to be provided by the taxpayer. There is a surplus in the theoretical national insurance fund, but once it is spent, it is gone. It is just gone; that surplus will be spent fairly quickly. Although there will be some money coming in, the amount will not be sufficient to pay this off. In the end, it has to be a political judgment taken by a Government to say that it is a sufficient priority for them to ensure that, year on year and in the long term, pensioners are better off. We need to identify the time for that in the context of the overall state of the economy and the way in which public finances are going. We need to see how we can put all that together as part of a package. Our package involves the state changes coming into place in 2010, after which we will put in place further changes in the private sector in 2012. They are important changes.

David Drew: rose—

Lynne Jones: rose—

Mike O'Brien: I give way to my hon. Friend the Member for Stroud (Mr. Drew), and then I must make some progress.

David Drew: I thank the Minister for giving way. We all heard the point made by my hon. Friend the Member for North-West Leicestershire (David Taylor) that the group who will inevitably lose out the most are older pensioners, because for all sorts of reasons they will not see the benefit of the retying of the earnings link. Is there some possibility, given the surplus in the national insurance fund, of targeting that older group, not necessarily through the Bill? The Government ought to be considering that group. I wonder what my hon. and learned Friend has to say about that.

Mike O'Brien: As my hon. Friend is aware, we have made the provision of help for older people a key part of our expenditure. In the recent Budget, announcements on the winter fuel allowance prioritised pensioners because of the circumstances arising from increased fuel costs. The Budget means that next year's winter fuel payments will increase to £250 for households with someone over 60 and £400 for those with someone over 80. That is a significant contribution to older people's winter fuel bills.
	As my hon. Friend will be aware from his own constituents, we have also made it a priority to introduce funding to ensure that older people have free bus passes from 1 April. It is also the case that we have introduced things such as free eyesight tests and free TV licences for the over-75s and we have outlawed age discrimination. We have taken a whole series of steps showing that this Government regard older people and pensioners as a priority—not only in financial terms, but by making changes to how our society operates and dealing with discrimination against older people in the work force. I am working at the moment on another small but symbolic step to ensure that we have an older people's day to show our respect for their role and contribution to our society. All those things are part of our commitment.

John McDonnell: rose—

Lynne Jones: rose—

Mike O'Brien: I give way to my hon. Friend the Member for Hayes and Harlington (John McDonnell), and then I propose to move on.

John McDonnell: We are still trying to tease out the Government's thinking on why they will not move on this measure. Will the Minister explain—or even give a reference or place information in the Library—the Government's calculations and assessment of the impact of this level of expenditure on the overall economy? What macro-economic impact would it have if the new clause were accepted? Most of us believe that it would actually have a directly beneficial economic impact not just on individuals but, by increasing demand and thereby expenditure, on the overall economy. At the same time, will the Minister give us some indication of the actuarial calculations of how many existing pensioners will not benefit from any change of policy by 2012 or 2015 because they will no longer be alive?

Mike O'Brien: The additional cost of earnings uprating of the basic state pension from 2010 in 2007-08 prices is as follows: in 2010, £0.8 billion; in 2011, £1.5 billion; in 2012, £1.6 billion; in 2020, £2 billion. Those expenditures will have to fit within the overall context of the Budget that the Chancellor has to look at.
	I was more than a little concerned by some of my hon. Friend's comments about pension credit. We have written on four or five occasions over the course of the last year to people who we think might be entitled to pension credit in order to try to get them to make those claims. We are working enormously hard to increase the numbers of people who are on pension credit. It is a Government priority to ensure that we deal with issues around fuel poverty, particularly for pensioners, and around broader pensioner poverty, too.

Lynne Jones: rose—

Mike O'Brien: I will give way one last time.

Lynne Jones: I agree with my hon. and learned Friend that the Government have done a great deal for today's pensioners. Of course, it is too late for them to save for their retirement, so my concern is that we are not doing enough to incentivise future pensioners sufficiently to save. The Minister is absolutely right that it is all about priorities. Last year, for example, the Government chose to spend £1 billion on reducing inheritance tax to benefit some of the more affluent members of our society, so is it not time that the Government gave priority to this now? We could find money from other areas—for example, from the huge proportion of money going in tax relief to higher-rate taxpayers on their contributions to pension schemes.

Mike O'Brien: As my hon. Friend knows well, we made additional provision for pensioners in the recent Budget in the form of winter fuel payments. That not insignificant contribution will go to every pensioner household in the country with someone over 60. We recognised that pensioners faced increased bills and we made provision for it. Our priorities for helping pensioners are therefore very clear from the last few months.
	What we are undertaking, as part of a broad-based social reform, is the biggest thing that has happened in pensions since the creation of the state pension system 100 years ago—

Mr. Deputy Speaker: Order. I understand that it is very tempting for the Minister to speak to Members, but let me gently remind him that he should address the Chair.

Mike O'Brien: My apologies, Mr. Deputy Speaker.
	We are putting in place the biggest package of pension reforms undertaken in 100 years. All the measures that we have taken and all the alterations that we are making in state provision relating to, for instance, equality for women and carers, the Pension Protection Fund and the Pensions Regulator constitute a major package of change. A keystone of that package is the restoration of the earnings link. We have made the importance of that clear in legislation: we have taken the unprecedented step of establishing in law that the Chancellor is obliged to do it. We have also specified 2012 as the year in which we seek to do it.
	I accept that there is a caveat relating to affordability. My hon. Friend the Member for Newcastle upon Tyne, Central is aware of the issues that the Chancellor will need to consider. I know from my hon. Friend's background on the Treasury Committee that he has had to examine the detail of those issues, and he knows as well as others that they must be considered in the round. It is easy to be flippant about what could be done if something or other were the case, but the position must be seen as a whole.
	There will be winners and losers—there are ways in which the taxpayer will have to fund the change—and we need to act with a degree of care. However, I repeat the point made by my hon. Friend with which I began my speech by endorsing: the restoration of the link is a crucial part of this package. I ask my hon. Friend to let us introduce the package as a whole, because it provides a long-term guarantee that pensioners will be given a better deal, provided not by them but by this Government and what they have done.

Nigel Waterson: I am slightly at a loss. There seems to be a huge degree of unanimity in the House about what should be happening, but we do not seem to be making any progress. The Minister ended where he began, by saying that the Government would make the change in 2012 or 2015, when it was affordable. As I understand it, he has said nothing new. If he thinks he has said something that we have not heard before, I shall be happy to give way to him so that he can explain to me what it is.
	The Minister talked of the need for flexibility. That is the point. The Government have insisted on flexibility, for better or worse, but I did not observe any more in what he said tonight than in what he has said before.

Mike O'Brien: If the hon. Gentleman is seeking a change in the date, he is right to say that I have not announced anything specific or new. What I have done, in responding to the points made by my hon. Friend the Member for Newcastle upon Tyne, Central, is set the key nature of the restoration of the link in the context of our overall package of proposals. It is essential to our policy delivery, and to the action that we wish to take to help older people. It is not an optional extra; it is not something that we might do if the circumstances were just right. It is something that we must do. If we do not do it, the Bill, and many of the provisions in the 2007 Act, will not have the foundation that is necessary for them to deliver for older people.

Nigel Waterson: I am grateful for that clarification. I now need further clarification, on affordability. If, in 2012 or 2015, the Chancellor decides that the change is not affordable, will it happen? Yes or no? Again, I do not think that the Chancellor is saying anything different from what has been said in the past, namely that if it is not affordable it will not happen—or am I, again, missing something?

Mike O'Brien: It is in the statute.

Nigel Waterson: It may be in the statute, in which case I am delighted, but my understanding is that there is still a "get out of jail free" card in the shape of affordability.
	I have a hunch, which relates to something said by the hon. Member for Newcastle upon Tyne, Central (Jim Cousins). The economic climate is rather less encouraging than it was a few months ago. Will that have an effect on the dates of 2012 and 2015, or are they written in stone? Is there no possibility that the Government will back away from acting within that time scale, whatever the economic situation?

Mike O'Brien: The Government have a clear commitment to the policy that I have set out. There is no "get out of jail free" card. We have put in place a package of measures that requires that this measure be put in place. We are not going to jeopardise everything that we have put in place in order not to make this change; that is complete nonsense. The change is a key component of our reforms, it is something that we will deliver, it is something of which Labour will be proud, and it is something that the hon. Gentleman's party would never have done unless we had committed ourselves to doing it first.

Nigel Waterson: I do not want to reopen old wounds, but had we won the last election we would already be implementing this promise. That is history, however. I am trying to narrow any differences between us, because it seems to me that there are no real differences of principle. In their own ways, the two major parties have reached similar conclusions. All we are talking about is the time scale.
	I happen to believe that the Government have tested to destruction the ability of means-testing to deliver help to those who need it most. Those who require any persuasion of that should bear in mind the number of people—up to 1.7 million—who are not claiming the pension credit to which they are entitled. Lest anyone have any illusions, when pension credit was first introduced, the Treasury's assumption was that 1.4 million people would never claim it. It always assumed that it would have the money in its back pocket whatever happened, because at least 1.4 million would never claim it.
	I do, however, agree with the Minister when he describes this measure as part of a package. As I said earlier—as, I think, did the hon. Member for Newcastle upon Tyne, Central—this is all part of the Turner package. We have legislated for the future raising of the state pension age. We are dealing with personal accounts. It is all part of the same package. We are not asking the Minister to do something that he is not proposing to do; far from it. We are merely asking him to tell us when he is going to do what he proposes within this time scale.

Lynne Jones: According to my recollection of the Turner proposals, Lord Turner presented three scenarios, 2010, 2011 and 2012, and demonstrated that any of them could have been afforded by different kinds of manipulation of the system. Potentially, however, the Government are to postpone implementation of the Turner package until 2015, three years after the last date that he gave.

Nigel Waterson: The hon. Lady is right to remind me that there was a series of different scenarios. Indeed, someone—it may have been the hon. Member for Newcastle upon Tyne, Central—pointed out that the beginning of the next Parliament is a fairly movable feast. At one time it looked as though it might have happened by now, but that was not to be.
	I am not saying that the Government are bad people, or that pension credit is a bad thing. I am sure that pension credit has helped many people, but, equally, there are many people whom it has not reached and will never reach, and whom it should be reaching. The only reliable way of getting help to those who need it most is to boost the basic state pension. Apart from being the right thing to do, as we concluded before the last election and as the Government have obviously concluded, it is the best way of getting help to people who do not want to fill up forms and who do not think that they are entitled to it.
	Take-up of some means-tested benefits has actually been falling. Council tax benefit is an example. Many ladies in my constituency—widows—do not apply for it, believing that because they own their homes they could not possibly be entitled to it, although for that reason they are living in a kind of genteel poverty.
	We all agree that this should happen, and we all agree about the parameters of the time scale, but why will the Government not narrow the time scale and tell us now rather than later, especially at a time when pensioner poverty is a political priority for everyone?
	I intend to ask leave of the House to withdraw new clause 7, but I am still keen to support new clause 16, tabled by the hon. Member for Newcastle upon Tyne, Central and others, and urge my colleagues to do the same. I very much hope that the hon. Gentleman will press his new clause to a Division at the appropriate time in our deliberations. If he does not, I have every intention of trying to catch your eye to do so myself, Mr. Deputy Speaker.
	I beg to ask leave to withdraw the motion.
	 Motion and clause, by leave, withdrawn.

Jim Cousins: If I may, Mr. Deputy Speaker, I would very much like to have the opportunity to explain whether I shall call for a Division on new clause 16.

Mr. Deputy Speaker: Now is not the appropriate time to do that; we have dealt with the lead new clause in the current group. The hon. Gentleman might have an opportunity later to do what he asks for, but we now need to move on to the next group of amendments.

New Clause 12
	 — 
	Investment principles

'The Authority must have regard to the United Nations principles for responsible investment ("UN PRI") and adherence to those principles will be part of the contractual arrangements with fund managers in respect of—
	(a) addressing environmental, social and corporate governance issues in investment policy statements;
	(b) assessing the capabilities of internal and external investment managers to incorporate such issues;
	(c) asking investment managers to report on their engagement with such issues;
	(d) including UN PRI requirements in requests for proposals;
	(e) aligning investment mandates, monitoring procedures and performance indicators with the UN PRI.'.— [Mr. Waterson.]
	 Brought up, and read the First time.

Nigel Waterson: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 25, in clause 70, page 34, line 34, after 'the', insert 'needs and'.
	No. 26, in page 34, line 36, at end insert
	', provided this can be done at no disproportionate cost to the scheme overall.'.
	No. 39, in page 34, line 38, at end insert—
	'(g) the UN Principles for Responsible Investment should be adhered to'.

Nigel Waterson: We now have a complete change of topic. New clause 12 arises from a good debate we had in Committee about investment principles as they apply to PADA—and to the board and trustees in due course. It seems that everyone is talking about ethical investments to which there seems to be a range of different approaches, of which this new clause is only one. It merely seeks to apply to the authority the
	"United Nations principles for responsible investment ("UN PRI") and adherence to those principles will be part of the contractual arrangements with fund managers in respect of"
	the variety of matters listed.
	The hon. Member for Carmarthen, West and South Pembrokeshire (Nick Ainger) pointed out in Committee that the Co-op ethical fund had had one of the best performances of any all-shares funds in recent times, so it is not as if we are suggesting a measure that is likely to fetter the ability of the personal accounts system to provide a decent return for those saving into it. In fact, in many respects, the opposite is the case. I am delighted that our proposals have received support from a range of different organisations, including FairPensions: The campaign for responsible investment. It makes the point that responsible investment does not necessarily mean disinvesting from so-called unethical industries, but that it does mean taking steps such as to
	"proactively engage with companies on environmental, social and governance (ESG) issues"
	and
	"working with them to future-proof their profits by limiting the potential of...poor governance, lax safety standards or climate change".
	One of the attractions of the UN principles as opposed to other codes that are sometimes cited in this context is that they are not prescriptive but provide what is called a voluntary and aspirational code of best practice.
	FairPensions goes on to say that this House
	"should affirm its commitment to safeguarding investments, and to responsible business practices, by amending"
	the Bill in the way suggested. It says in conclusion:
	"By committing to the UN Principles of Responsible Investment, Parliament will provide a clear mandate to the Personal Accounts Delivery Authority and its fund managers to engage with companies on environmental, social or governance issues."
	The Government's attitude in Committee was very much that they did not want to bind the hands of PADA—or the trustees in due course. I find that surprising, because the question of ethical investment was foreshadowed even in the impact assessment produced alongside the Bill. We are not trying to be prescriptive; we are Conservatives, so we understand the need for business not to be fettered by unnecessary red tape or bureaucracy. However, surely PADA and its successor could reasonably be expected to reflect current best practice—the Pension Protection Fund is already signed up to the UN principles, as are various comparable bodies around the world. The new clause would, however, still leave some flexibility to those running the personal accounts system.
	Two approaches are possible. We know—because that is the way life is—that the default fund will far and away be the biggest fund, as people will not make a conscious decision to invest in a particular type of fund and therefore by default will end up in that default fund. One option is to apply the UN principles right across the board, and particularly to the default fund. Another option would be a specific fund based on those, or comparable, principles. It seemed to be accepted without debate in Committee that there would be a fund—possibly out of only five or six altogether under personal accounts—that would be subject to sharia law. There is a lot of sense in that; it is important that we make that kind of provision. However, why should we not also have a fund based on ethical principles—perhaps Christian principles? Within a limited number of funds—I think the number should be limited for all the practical reasons debated in Committee—there should be that element of choice.
	Following our Committee deliberations, the Minister was good enough to write to Mr. Tim Jones, PADA chief executive—who has featured quite a lot in our debates today—and raise with him the issues discussed in Committee. The Minister shared with us the reply he received on 5 March from Mr. Jones, in which he says:
	"I take very seriously the strength of feeling expressed in relation to investments within personal accounts and, in particular, responsible investment."
	He goes on to point out that it is ultimately
	"the responsibility of the trustees"
	and he then says:
	"Consistent with the level of interest and strength of feeling shown by the Committee in this area I intend to address the issue of responsible investment in PADA's public investment consultation which is due to take place later this year and which aims to capture the views of the personal accounts scheme target audience."
	Mr. Jones concludes by saying that he hopes that what he says has "provided...sufficient reassurance". The answer is that it does not. I am delighted that there will be a consultation on this, but I would have thought the appropriate way to proceed would be to consult on the way to deliver these kinds of ethical investment principles in practice under PADA—and the board. All we are asking to do is to put in the legislation the fact that the authority must have regard to the UN principles for responsible investment. That is not an unreasonable thing to require. When personal accounts are up and running, the funds will be a substantial part of investment in this country. That will be the case for the default fund in particular, for reasons that I have mentioned. Therefore, it is important that a message is sent out that the authority will have regard to those ethical investment principles.
	If Ministers take the opposite view, it is odd that, as I have mentioned, the Pension Protection Fund is already signed up to the principles. Why would PADA not be so signed up? It is perfectly legitimate for Mr. Jones and his colleagues to consult on the way in which this matter is delivered—I have given a couple of possibilities—but not on the overwhelming principle. It is perfectly reasonable for this House to say that the principles should apply and to leave the detailed work to the authority.
	Amendments Nos. 25 and 26 approach things from a slightly different angle. By proposing to include the word "needs" and the question of "disproportionate cost", as we tried to do in Committee, the amendments make the point that even where people have their own preferences as to how their money should be invested, both their preferences and their needs should be taken into account. That is because people sometimes make slightly bizarre investment decisions, often for the best possible ethical reasons, when they would be better advised doing something slightly different, or at least spreading the risk in a different way.
	As amendment No. 26 sets out, when it comes to offering choice we must address a real issue about disproportionate cost. If any message came across loud and clear from the evidence of Mr. Myners and Mr. Jones to the Committee, it was their obsession with keeping things as simple as possible for personal accounts in order to try to drive down those running costs and administrative costs as far as possible, so that the accounts can deliver a reasonably cheap, easily accessible and easily understood form of investment for retirement. We are not looking at anything remotely like the Swedish model, which I believe has about 200 to 300 different funds, and I commend new clause 12, and amendments Nos. 25 and 26, to the House. If the Liberal Democrats do not take offence, I shall not deal with their amendment No. 39, as I am sure they will do it justice.

Danny Alexander: The hon. Member for Eastbourne (Mr. Waterson) outlined a number of issues. Although the subject was well debated in Committee, there is a reason to return to it now, so I shall thus discuss new clause 12 and amendment No. 39.
	Taken at face value, it is easy to misunderstand what the UN principles for responsible investment involve. That is why I concur with a comment made by the hon. Gentleman; although Tim Jones's letter in response to the Minister's drawing to PADA's attention the Committee's debate certainly suggested that PADA was interested and would wish to consult on the proposal, it is important to recognise that the UN principles for responsible investment are not a set of strongly binding prescriptive principles that must be followed in every detail or else. Rather, they are about having in place the correct toolkit to examine the range of responsible investment issues.
	Rather than saying precisely how the toolkit should be used, the principles provide a range of tools for use, and there would, of course, then be an obligation on PADA and, therefore, potentially on the variety of funds themselves, to take the principles into account in making investment decisions. If such a toolkit was not in place, fund managers, for example, would not be able to work effectively with investee companies or to command public confidence that due diligence was being practised.
	There is significant public concern about this, and the Minister has rightly recognised that in relation to the availability of a sharia law-compliant fund. There was a great deal of public concern in respect of the use of environmental green funds and about the operation of other funds of responsible investment. One of the interesting facts to emerge from the briefing and other material that has been provided for this debate—other analyses also confirm this—is that developing a capability to monitor and manage environmental, social and governance issues, all of which are covered under the UN principles, can also increase both returns and financial security.
	That business case has already persuaded asset owners and managers with approximately $10 trillion of assets under management to become signatories to the UN principles for responsible investment. Included in that are state funds in France, Norway, New Zealand, Canada and Ireland. As the hon. Member for Eastbourne said, the signatories also include our own Pension Protection Fund, some UK pension funds and a number of major UK asset managers too. That set of principles has not emerged from nowhere, nor is it so outlandish that it could not be adopted. In fact, the principles have been widely adopted by other organisations in the UK and across the world.
	Of course the issue of cost in following the UN principles of responsible investment has rightly been a concern for PADA throughout the deliberations on this Bill. The evidence that we have is that the cost to fund managers is relatively insignificant, consisting of the costs of employing a small number of staff to examine the environmental, social and governance issues that might arise. Many fund managers already employ staff in that capacity. Other costs might include subscribing to environmental, social and governance research services, and the UN PRI itself asks for a voluntary contribution, although it is perhaps worth noting that the majority of signatories do not pay. Therefore, the costs to beneficiaries of personal accounts would be relatively small and, given the examples that we have of investments in such areas achieving good returns, could be outweighed by the gains.
	In many areas, in both the public and private sectors, the UK is seen as a world leader in responsible investment. I am sure that is why the Pension Protection Fund, among others, has signed up to the principles. Many would consider it to be very strange if a flagship scheme established by legislation—as we hope personal accounts will be—did not sign up to the principles. I look forward to hearing from the Minister why it is that he is not willing to push the issue a bit harder with PADA at this stage.

Mike O'Brien: I hear the points made by both Opposition spokesmen. It is important that we give full and fair consideration to the UN principles, and that is why I wrote to the chief executive of PADA to ensure that the board did so. I received a positive response. Tim Jones, the chief executive, confirmed that the issue of responsible investment will be explicitly addressed in the investment consultation that the authority will undertake later this year. I am not sure why Opposition Members do not want the consultation to take place before that happens. It would be a better way to approach the issue.
	We want to have a discussion on the UN principles, and what better way than to create a consultation process in which the broad principles of the pension fund proposal and the creation of personal accounts can be discussed openly and fully? The UN principles could then be the focus of that debate. That would be a positive response.
	I am especially interested in the views of the hon. Member for Eastbourne (Mr. Waterson) on this matter. One of the key issues that we have considered on personal accounts is the need to ensure that they complement rather than compete with current provision. We also want to ensure that personal accounts do not have advantages over and above other schemes, which is one reason why I was sceptical about some of the proposals made in relation to pay-as-you-save.
	However, nor do we want to create a situation in which there are disadvantages. Would the application of the UN principles be a disadvantage? It would be interesting to find out whether the Conservatives regard them as an advantage in some way. If the principles would oblige this particular pension scheme to apply the principles, would they oblige all other pension schemes to comply with them? We have taken the view that the principles are very worth while, but it should be a matter for the trustees to consider, for each individual pension scheme, whether they wish to apply them.
	The Conservatives seem to be suggesting that we should oblige a particular pension scheme to take on those principles—in fact that we should oblige not only the pension scheme to take them on, but PADA, which is a delivery authority that does not run a pension scheme but merely sets one up. I am perplexed about what the Conservative party's policy now is. If we are to oblige this particular pension scheme to have this provision, why not all public sector pension schemes—why not all private sector pension schemes? Is that now Conservative party policy? I would be interested to know.
	My view remains that which we set out in Committee. The principles are good and valuable, and we want to see pension schemes take account of them when the trustees regard that as appropriate. We will not force pension scheme trustees to adopt them. We are happy to say to those who are setting up personal account schemes that they should consider the principles. Indeed, we have had a positive response from people who have said that they will consult on the inclusion of the principles in their pension schemes.
	We have played a positive role in promoting that approach. We have always held the view that the trustee should decide the principles on which a scheme operates and invests. That has always been part of our law. There are some constraints on trustees, but we have essentially said that the interests of the members are best protected by giving obligations to the trustee, which they have to enforce, that are limited to ensuring that the trustee looks after the best interests of the members.
	It now seems that some people are suggesting that we must go further—not with the consent of the trustees, but otherwise. We need to be a little cautious before we do that. As a result of the Committee debates, I contacted Tim Jones, the chief executive. We have had his response and we need to recognise that we have created PADA in order to ensure that it consults properly with the public in the setting up of one of the biggest pension schemes, if not the biggest, ever created in this country. The aim is that there should be widespread public consultation for the precise reason why up to 9 million people, many of whom are not currently saving, will be signing up to the scheme. If the scheme is to be treated in an entirely different way from any other scheme so that the trustees cannot make decisions about what investment principles they will operate under, that is quite a significant step.
	In a sense, I am with the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) in saying that the principles are good and that I hope that in due course the trustees will have regard to them. I can see that argument. We would not have written to the chief executive of PADA if we had not taken the view that it was important that that should be so.
	There is a need for the trustees' independence and expertise in making such decisions to be recognised, too. That is the basis on which pensions have been protected in this country for a long time, and I do not think that we should tamper with it for the purpose of making a change that is, at best, symbolic, given that we already have a clear concession from the chief executive that the matter will be consulted on.
	New clause 12 and amendment No. 39 presume that socially responsible investment approaches would be in the best interests of members. However, signing up to the UN principles would require active management of funds, which is more expensive than passive management of funds. It must be for the trustee to decide whether the additional costs are in the members' best interests. Otherwise, we will effectively be telling the trustees that they must manage their funds in a particular way and ensure that the principles that the UN has put forward are complied with. Let us be clear about this: we will be saying that if there is any extra cost in doing so, it will fall upon the people who contribute to the pension scheme.
	After consultation with members of the public, the trustees may decide that they want to do that. Many of us in the House might well say that that is a laudable thing for them to decide, provided that they have consulted with the scheme's members, and provided that if PADA has taken a view that it is advisable for the principles to be had regard to, it has itself consulted stakeholders and the public in setting up the scheme.
	We are being asked to ignore all that and take a step that we have not taken elsewhere. We are being asked to take a step that goes well beyond and has potential cost implications for some of the poorest contributors that there are likely to be to pension schemes. I do not know whether either Opposition Front-Bench team has made an assessment of the potential costs for such low-paid people. I suspect that they have not, and that they are prepared to impose additional costs on members and potential members of the personal accounts scheme without even considering the implications and without talking to them or consulting them. They should proceed with a great deal of care.
	It would be wrong to argue that the scheme should be used to set an example to other companies or pension schemes, as suggested by some Members in Committee. The scheme's only purpose is to represent the best interests of its members within the existing legal framework. It is not the right instrument to express Parliament's general views on investment. We are creating a pension scheme for low and moderate income people. We may have all sorts of views about what we see as a desirable investment policy, but do we really want to impose those views on people on low incomes, whereas we are not imposing them on people in other pension schemes who are much more able to afford to pay for the principles?

Paul Rowen: I think that the Minister is misinterpreting our position, which is that there has to be a choice. Whether it is a sharia-based fund or one that signs up to the United Nations principles, the person who invests the money should be allowed to make the choice. We do not want to impose anything on anybody. We want the Government to ensure that such a choice is made available.

Mike O'Brien: It should be a matter for the trustees of the pension scheme to examine the various options that they wish to make available to its members. As Paul Myners, the chairman of PADA, quite clearly said in his evidence to the Committee, each additional whistle that is attached to the scheme will have a cost for the members. Keeping it simple is the key to effective delivery of personal accounts. If we do not do that, and if we do not create a scheme that people can know all about without having to make a detailed examination of the principles that will be applied in this scheme but not in others, we will create a whole series of problems for ourselves.
	The law already requires the trustees of all occupational pension schemes to state the extent to which social, environmental and ethical considerations have been taken into account in their statement of investment principles. They have to do that now. The legal requirements will apply to the trustee of the personal accounts scheme just as they will in any other scheme.
	It is possible today for the trustees of various schemes to choose to adhere to the UN principles in the statement of investment principles that they set out. We would applaud them for doing so, but the Liberal Democrats and the Conservatives appear to be advocating that a significant further step should be taken. Effectively, it would rewrite much of trust law. We all agree that the UN principles are good ones, but the Opposition parties seem to believe that the proposed scheme must be required, by law, to adhere to them, even though no other comparable scheme has to do so. I say to the hon. Member for Rochdale (Paul Rowen) that in every other scheme, it is left to the trustees to decide what is contained in the statement of investment.

Paul Rowen: The Minister once again misinterprets the UN principles. They are a toolkit—that is, a set of values to which trustees should have regard—and not a prescription for investment. The two things are very different.

Mike O'Brien: I accept that; it is why I was able to write to Tim Jones and ask him whether he would accept that the toolkit was something that he should bear in mind when he carried out the consultation later this year. However, if the hon. Gentleman believes that the principles do not have implications, I have to tell him that they do, and that those implications could incur costs that would have to be met by people on low and moderate incomes signing up to join personal accounts.
	Opposition Front Benchers do not seem to have thought through what they are trying to achieve with their proposals. Those proposals appear worthy and easy to implement. They seem nice and liberal, if I may use that word—

Nigel Waterson: No!

Mike O'Brien: I apologise to the hon. Gentleman for suggesting that he might have liberal inclinations on anything. The amendments would appeal to  Guardian readers—

Nigel Waterson: Never!

Mike O'Brien: I am sorry for suggesting that the hon. Gentleman might be trying to appeal to such people, but the proposals would look good in a  Guardian article. On inspection, it is clear that they would oblige people on low incomes to comply with something that people with higher incomes and better pension schemes would not have to comply with. Opposition Members need to think carefully, as what might look good in  T he  Guardian for one day could have significant implications for pension scheme members for a long time to come.
	Amendments Nos. 25 and 26 would amend the PADA principles in the Bill to require it to consider the needs of members. Moreover, when carrying out its work on investment, PADA would also have to consider whether members' preferences would result in disproportionate costs. Those are interesting ideas. In preparing its recommendations, the delivery authority will be required to consider the full range of guiding principles set out in what is now clause 70. That clause is at the core of the Bill, because it sets out what we are trying to achieve. It carefully sets out the balancing obligations to which PADA must have regard when we set up and run personal accounts.
	We have always been clear that although PADA will be obliged to meet those obligations, when the Personal Accounts Board and the trustee corporation are actually running a pension scheme, the trustees will have to take a view on what principles they believe that they need to comply with in order to protect the members of that pension scheme. That is why we took the view that although PADA will be obliged to comply with the principles in clause 70, we will not impose broad-based principles on the trustees without their consent.
	Clause 70 means that the trustees will take into account the investment preferences of potential members when PADA sets up the scheme, but they will have to balance that consideration with other principles, including that of encouraging participation, minimising the charge to members and respecting diversity; there was broad support for those principles when we discussed them in Committee.
	I understand the sentiments behind amendments Nos. 25 and 26, but they are substantively already reflected in the current principles. We do not have to adopt the UN principles to include the principles that are set out in clause 70. The principles that we have already included are designed to be considered together, and as a whole they ensure that members' needs will always be embedded in the authority's work when it prepares the scheme's draft investment strategy. Further changes to the principles are simply not necessary.
	We want to set out the way in which personal accounts will develop. The hon. Member for Eastbourne pretty much implied that the UN principles would apply to one investment account only, and not to the whole operation of the pension schemes. What we are looking at is a default scheme that will have a very limited number of additional options to which potential pensioners can sign up. Paul Myners said that he did not want all the bells and whistles put on; he just wants to ensure a simple, basic scheme, although there will be some options.
	After consultation, some members of the Personal Accounts Board may well take the view that they want an option that will enable ethical investment, and decide that the principles for ethical investment have to include the UN principles that we have discussed. I would applaud such a decision, but I want things to be done in a proper, sensible way, through consultation with potential members and stakeholders, and I want discretion to be given to the trustees in due course. The Conservatives and Liberal Democrats are wrong to seek to deny them that discretion.
	This debate has touched on some fundamental principles, including the principle that it is for trustees, and not the Government or Members of the House, to determine the best interests of members of the pension scheme. I ask Members to accept that the authority and autonomy of the trustees is important, and that we should not constrain them any further than the existing legal framework does.

Nigel Waterson: I am amazed at how tetchy the Minister has been. He talks about  Guardian readers; there was a time when it would have been Conservative Front Benchers arguing in the last ditch against ethical investment principles, and his party arguing the opposite. Has he not noticed that politics has changed dramatically in the last 18 months? It is time that he adjusted to it.
	The Minister's response was wholly inadequate and bad tempered, and failed to appreciate that we are discussing not any old investment fund, but the personal accounts fund into which people will be automatically enrolled. Most people listening to the debate will want to see the principles established, not least Mr. Myners, who has given his name to some existing principles for investment. On that basis I shall press—
	 It being Nine o'clock, Mr. Deputy Speaker  put forthwith the Question already proposed from the Chair, pursuant to Order [7 January].

Question put, That the clause be read a Second time:—
	 The House divided: Ayes 173, Noes 290.

Question accordingly negatived.
	Mr. Deputy Speaker  then put forthwith the Question s necessary for the disposal of the business to be concluded at that hour.

New Clause 16
	 — 
	Earnings link

'The Secretary of State shall announce to Parliament his intention, as to the timing of the implementation of section 5 of the Pensions Act 2007, no later than the publication of the Pre-Budget Report for the financial year 2009-10.'.— [Jim Cousins.]
	 Brought up, and read the First time.
	 Question put, That the clause be added to the Bill:—
	 The House divided: Ayes 195, Noes 269.

Question accordingly negatived.

Clause 60
	 — 
	Consultation of members and employers

Amendment made: No. 34, page 31, line 9, leave out
	', but only in respect of reasonable expenses'.— [Mr. Mike O'Brien.]
	After Clause 78
	 Amendment made: No. 35, page 39, line 40, leave out Clause 79.— [Mr. Mike O'Brien.]
	After Clause 81
	 Amendment made: No. 36, page 40, line 31, leave out Clause 82.— [Mr. Mike O'Brien.]
	 Order for Third Reading read. —[Queen's Consent, on behalf of the Crown, signified.]

James Purnell: I beg to move, That the Bill be now read the Third time.
	I say that with a certain amount of déjà vu, because I said exactly those words almost a year ago. I also said then that we were implementing the most ambitious reform of our pension system in modern times, and with the Bill then—now the Pensions Act 2007—and the Bill that we are debating tonight, that is exactly what we are doing. That déjà vu also applies to the many hon. Members in the Chamber who have followed the Bill right the way through and given such great service on the Committee. No one has as much a sense of déjà vu as the hon. Member for Eastbourne (Mr. Waterson). I believe that this is his fourth Pensions Bill. I do not know what he did in a previous life to deserve this fate, but I am sure that serving on four Pensions Bills is enough to have expunged whatever was wrong with his karma.
	I also want to pay tribute to my colleague, the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt), who has taken through many of the clauses of the Bill. In particular, I want to pay tribute to the Minister for Pensions Reform, my hon. and learned Friend the Member for North Warwickshire (Mr. O'Brien), who has a wide range of admirers and who has commanded support and compliments for the effective and consensual way in which he has taken the Bill forward, building on the achievements of his predecessor but two—my right hon. Friend the Member for East Ham (Mr. Timms)—and correcting the many mistakes of his immediate predecessor, whose advice he has been wise to avoid all the way through.
	So, why is this reform needed? It is needed because of the changes to pensions over the last 20 or 30 years, and it has been built on the recommendations of the Turner commission. I am sure that everyone in the House would like to pay tribute to the commission for its work. It has laid the foundations for the Bill that is reaching completion in this House this evening. Many commissions see their work languish on a shelf. Indeed, some people predicted that that might happen in this case. Tonight, however, we are now putting in place the second stage of the legislation for these reforms. Last year's Pensions Act was the first side of that coin. It made pensions simpler, fairer and more generous, and it built a more solid platform on which people could save. This Bill will make it easier for people to save on the basis of that platform. It also puts in place what I believe will be seen as a genuinely historic change: the right for everyone to have an occupational pension scheme.
	Why did the Pensions Commission make its recommendations? It did so for two reasons. It recognised the progress that had been made since 1997, stating that
	"average pension income today compares well with that of previous generations".
	And so it does. The National Audit Office has also recognised the "real and substantial progress" that has been made towards helping the poorest pensioners. We are proud of having taken more than 2 million pensioners out of absolute poverty and 1 million out of relative poverty, and to have achieved a situation in which pensioners are now no more likely to be poor than anyone else in the population. That is a remarkable achievement, when we consider that everyone else can rely on their wages going up.
	The Pensions Commission also said that there was a compelling case for further reform, for two clear reasons. The first was what it called the fool's paradise of "irrational exuberance", in which the exceptional equity returns of the 1980s and 1990s—when people saw their investments increasing at a very great rate—allowed many schemes to
	"ignore the rapid rise in the underlying cost of their pensions promises".
	People were making promises, but they were not putting away enough money to fund them. The Pensions Commission said:
	"When the fool's paradise came to an end...companies adjusted rapidly...A reduction in the generosity of the DB pensions promises which existed in the mid-1990s was inevitable."
	That is the first reason why change was necessary. We needed to address that fool's paradise.
	The second reason, which has not received so much comment, is that final salary schemes, even at their best, only ever benefited a minority. It was always the case that the majority of people did not benefit from them, and tonight's historic change corrects that.

Michael Penning: One group of people who were not living in a fool's paradise consisted of the 125,000 pensioners who had their pensions stolen from their occupational pension schemes. Seven hundred of them are from my own constituency. I am pleased that after five years, the Government eventually came forward and gave them 90 per cent. of the pension to which they were entitled, but I have two questions for the Minister about part 4 of the Bill. First, can he confirm that the pensioners who were without their pension for nearly five years will not be taxed on the lump sum? Some of my constituents, such as Mr. Peter Humphries, will be charged 40 per cent. of their lump sum, although he had to go to work to pay for his family's upkeep when his pension failed to come through for five years. Secondly, have the Government seen sense enough to wrap the financial assistance scheme up with the Pension Protection Fund? It seems ludicrous to have the two; what plans does the Secretary of State have for the FAS?

James Purnell: I am happy to give the hon. Gentleman both the assurances that he seeks. The first was given at oral questions recently. On the second, he will be glad to know that we are consulting on allowing the PPF to be more closely involved in developing the new FAS operations. Subject to the outcomes of that consultation, we are hopeful that the PPF will be able to take a formal operational role in the extended FAS scheme. I hope that that addresses the hon. Gentleman's concern.

David Drew: The Secretary of State will not be surprised to hear that I am going to raise a point about new clause 23, which we were unable to debate today. It relates to the remaining group of pensioners who have lost their pension but are covered neither by the FAS nor by the PPF. It is known as the "Desmond problem", which my hon. Friend the Member for Foyle (Mark Durkan) has regularly explained. Will my right hon. Friend give us an assurance that the issue will be looked into again in the other place? I understand that there are difficulties, but if we could get an assurance that that will be further considered there, we would be happy with the rest of the Bill.

James Purnell: I can assure my hon. Friend that we are looking into that, and I believe it was mentioned earlier in the debate. We would be happy to meet him, or indeed any other Member interested in the issue, if that would be helpful.

Michael Penning: rose—

James Purnell: I will give way one final time, but I want to make some progress.

Michael Penning: I have been in my place since Prayers to ask this question, so I hope that the Secretary of State will bear with me if I press him again. I asked whether my constituents and other FAS members would be taxed on the lump sum. The Secretary of State alluded to the fact that the matter had been addressed at oral questions. Since then, however, we have discovered that some are going to be taxed on the lump sum because it is coming through in the form of a lump sum, and because they had to work to keep going during the five-year wait for compensation. Will the Secretary of State confirm that my constituents will not be taxed on the lump sum for which they have waited for five years, and which is the pension that they were entitled to in the first place?

James Purnell: I believe that we have addressed that issue: those people will be taxed in exactly the same way as if the situation had not occurred and they had been paid regularly—but we shall be happy to write to the hon. Gentleman to set that out.
	Tonight's changes address the two key problems—that only a minority had access to a private pension, and that even those were unaffordable, so radical reforms were needed. In addition to paying tribute to the Pensions Commission, we should pay tribute to the stakeholders who have carried the Bill all the way through, and have been prepared to make trade-offs to ensure that that happens. The consumer representatives and the unions have accepted that the state pension age will be higher; the employers and the Association of British Insurers have accepted that there will be compulsory contributions from employers and the new low-cost personal accounts scheme. Because people have been prepared to make those trade-offs, the consensus has been solid throughout the Bill's passage. It means that, tonight, the combination of giving everyone access to personal accounts or to a private pension, combined with automatic involvement, will enable us to turn on its head the inertia that currently stops so many people from saving.
	In conclusion—we have little time, and I want to ensure that everyone who wants to speak can do so—we need to keep the word "consensus" at the forefront of our minds. Consensus is important not just as a political device, but in order to help people to save. If people are thinking about putting money away for 20, 30 or 40 years, they will be more likely to do it if they are confident that there is a consensus between political parties, which will ensure stability in the framework.
	In thinking about that, it is interesting to look back to a previous debate on the Social Security Pensions Bill 1975, which I read about this afternoon. I do not think that the hon. Member for Eastbourne had much to do with that particular Bill, although I am sure he will know how Barbara Castle felt when she said in opening her speech that it was the third time in just over five years that the Secretary of State for Health and Social Security, as she was then, had brought a pensions Bill before the House. If she is looking down on the hon. Member for Eastbourne now, I am sure that she will feel much sympathy for him.
	The interesting thing about that debate is that Barbara Castle said very clearly that she wanted to build her reforms on the basis of consensus. She said that she intended them to command general acceptance, and hoped they had succeeded in that regard. Later the Conservative spokesman—Lord Fowler, as he is now—said that his party believed consensus was possible. I think that on Third Reading there was no Division. Both sides hoped that the Bill would command a consensus that would continue, yet within years that consensus had fallen apart.
	The key thing that we should tell ourselves tonight is that by legislating we are not completing the reforms, but merely establishing the start of the process. If we believe, as I think Members in all parts of the House believe, that this is an important reform which is in the interests of millions of people—particularly low and moderate earners—I think we should say tonight that we are not satisfied for the consensus to be merely legislative, and that we will work together over the next few years to ensure that the hopes we have for the Bill will be realised in practice. We need to continue to make trade-offs, and to work together to improve the chance of millions of people to have decent incomes in retirement.

Chris Grayling: I echo the thanks and congratulations that have been extended to all who have been involved in the Bill's passage. I congratulate the Minister of State, for it is always a challenging task to steer these measures through; my hon. Friend the Member for Eastbourne (Mr. Waterson), who is a seasoned performer, but no less effective as a result of the number of occasions on which he has dealt with pensions matters from the Dispatch Box; the hon. Member for Rochdale (Paul Rowen); and all those who served on the Committee, who have dealt with the detail of the debate in a good and constructive manner.
	We have just heard the Secretary of State describe the Government's reform plans in glowing terms, but it is important for us to remember that we have been here before. Tonight I have been reading the report of a debate on the introduction of stakeholder pensions which took place in the House in 1999, led by the then Secretary of State, who is now the Chancellor of the Exchequer. The Government said that 4 million to 5 million people would benefit from stakeholder pensions, and described them as an appropriate vehicle for people on low earnings which had been almost universally welcomed. So we are not exactly at first base when it comes to major pension reforms, and this time it is important for us to get it right.
	We are not without reservations about the detail of the Bill, and we feel that work remains to be done on the reforms, although it is true that few Bills generate such a general desire for them to succeed. We want this Bill to succeed, because it is in the interests of the nation to have a pensions system that works, but, as I have said, we have been here before. On 11 May 1999, the present Chancellor of the Exchequer said:
	"I am confident that, by the end of this Parliament, pension provision and structure will be set on a firm footing that will serve this country well for generations to come."
	That did not actually happen. Now, the second time around, it really does need to work. Like the Secretary of State's favourite football team, the Bill demonstrates plenty of promise, but in the end, lacks the depth to deliver the results. We have had widespread discussions with different stakeholder groups, and, as the right hon. Gentleman said, the Government have received plenty of helpful advice from within the House and elsewhere. However, there has been little change in the detail, and little in the way of actual response to the concerns that have been raised.
	Means-testing has been a big issue—and again, we have been here before. In 1999, the present Chancellor of the Exchequer said:
	"The Government are aware that, because of the present capital and income rules, many pensioners who have modest savings or a modest income stream are adversely affected by the benefits system. We said in the Green Paper that we are determined to tackle that".—[ Official Report, 11 May 1999; Vol. 331, c. 132.]
	Here we are, nine years later, discussing the same issues—in this of all weeks, when the Government are having problems in dealing with the issue of financial support for people on low incomes.
	We have argued throughout that the issue of means-testing is potentially fatal to these reforms. I am grateful to the Secretary of State's predecessor, the Minister of State, for initiating the debate on the subject, but I have to say that we expected more by now. We set out specific issues to be processed in Pensim2, but we have not yet received a detailed response. We have seen no detailed information about the sensitivities surrounding take-up if the means-testing issue is not addressed, but we have had private warnings from some of the groups involved that Ministers are not taking the issue as seriously as they expected. It is extremely important for this review to be more than just a way of postponing bad news until a later date. It must not be a case of "What happens now?" We need a detailed document in the autumn, a debate in this House and an open and grown-up discussion about what can be done and when, and we need to accept that the cost of getting this right might not exceed the cost of getting it wrong; the cost of not getting this right in years to come might be a much bigger bill for the taxpayer and a much lower take-up of personal accounts, and it might undermine the reforms.
	We are equally disappointed that the Government have not yet fully addressed other key issues, such as auto-enrolment into GPPs. We do not want that. We have heard in the debate about the dilution of existing provision. It is extremely important to preserve existing provision—the Bill must add to, rather than undermine, what is already there. As the Bill leaves this House, Ministers still have little answer to some of these basic questions. It is extremely important that they be addressed. I hope that they will be addressed as the Bill progresses through the other place, and that their lordships will have the opportunity to put these questions time and again, and if necessary to change the Bill to ensure that they are answered.
	We have other key questions relating to the cost of the scheme. It will not work if the costs are too high. We talked earlier about rumours in circulation about what the costs are; it is extremely important that Ministers lay those to rest.
	It is also important for us to hear more from the Government over the next few weeks about what they will do to address the concerns of small employers in particular. Ministers will be aware that a number of pressure groups are asking for more information about what the Government intend to do, and it is important that we hear from them about that.
	I have said that we want to get things right—indeed, I said on Second Reading that we want this to work properly—and that is why we have attempted to engage in constructive debate. We want to get things right not least because there is now a good chance that it will fall to us to implement the reforms. Given Labour's trials and tribulations, it appears ever more likely that that will be the case. Indeed, the Secretary of State is already positioning himself to become the next Leader of the Opposition. The Conservatives are making sure that we are ready to take over Government, should the circumstance arise in 2010. We are still not convinced that the Government have got everything about these reforms right. If they do not address the issues as the Bill continues its progress through Parliament, we are ready and prepared to make the necessary changes in 2010 after the next election, in order to ensure that when the reforms come through in 2012 they deliver a system that really will, as the Chancellor said nine years ago, last a generation and do us proud for the future.

Paul Rowen: I join with the Secretary of State in thanking the Minister for Pensions Reform; I thank him for the courteous way in which he has dealt with our inquiries, and for writing to us on certain issues that we have raised. I also thank the hon. Member for Eastbourne (Mr. Waterson) for his comments—he is on his fourth Pensions Bill; it is my first, and we shall have to wait and see whether it is my last—and all the other Committee members and Committee staff.
	As the Secretary of State said, this is the final part of the implementation of the recommendations of the Turner report. Therefore, it is important to look at the two sets of measures together. This is a complicated Bill; there is a lot in it, and there is a lot of work still to do. As an Opposition, we have tried from the start to maintain the consensus, but to raise issues where we feel that there is a need for more information, more work or greater transparency.
	As the Minister for Pensions Reform knows, we still have several concerns and want work to be done on certain areas. Mention has been made of means-testing; I referred earlier to the Government's difficulties with the 10p tax rate, and we do not want that to be repeated in terms of means-testing. This is a groundbreaking reform that will ensure that many low and middle-income people save properly for their pension. It would be tragic if they were to get their pension and then lose it because the benefits system was not flexible enough. Again, we wait to see what the outcome of the review will be, and we hope that the Government will address this matter. I know that my colleagues in the other place will also be looking at this, and will perhaps be subjecting the matter to further scrutiny.
	We have raised the issue of generic advice and our concerns about the level of it. The Thoresen review has dealt with some of those matters, but we nevertheless again give notice that we have issues and concerns. We are disappointed that the Minister is only now having a consultation about the open-market option, because we share the view of much of the pensions industry that that should, and could, by now be in the Bill, and that it would have been a useful tool that could have benefited many people.
	We are disappointed with the fact that although the Minister can filibuster about the United Nations ethical principles, the Government have done little to implement them. This is not just for readers of  The  Guardian; this is about ensuring that investing ethically benefits pensioners as well as those who receive the investment. Nevertheless, the Bill is important and will benefit many people. If it ensures that pensioners have a decent income, that is to be welcomed.
	Finally, I am disappointed that the Government have failed, in the centenary of the introduction of the old- age pension, to say categorically that they will reintroduce, from next year or whenever, the link with earnings. The hon. Member for Epsom and Ewell (Chris Grayling) quoted the Chancellor's statement that many pensioners who are entitled to pension credits do not claim them. We want pensioners to have a guaranteed income, and all the issues about means-testing would be much better for that. Nevertheless, I welcome the Bill, which is a step in the right direction. I look forward to my noble Friends in the other place tabling amendments that we can perhaps consider on another date.

Michael Penning: It is an adage that if you sit here long enough, you will get your time. I am about to get more time than the Front-Bench spokespeople, which is fantastic news. As I mentioned, I came in for Prayers this morning. I have sat here throughout not only because this is a very important debate, but because the financial assistance scheme was not covered on Report and so I could not talk about it much then—I now have ample opportunity to do so.
	I have made many speeches in this House before this Secretary of State and Minister of State—the Minister for Pensions Reform—as well as before previous Ministers of State, calling for justice for the 125,000 pensioners whose pensions were stolen from them when their occupational schemes were wound up. I shall repeat again that more than 700 such people come from my constituency. I was ever so pleased when, after five years of campaigning by many hon. Members across this House, we thought we had reached the conclusion and we thought that those people would receive their compensation. We all fought for 90 per cent., and that is what they will get through the financial assistance scheme.
	I told my pensioners at our public meeting in my constituency on the Saturday when many members of the team who have been working with the Government Front-Bench team on the issue were present—people such as Peter and Jacquie Humphrey, Dave Allen and Ros Altmann—that we must examine the small print. I am worried not by the Front-Bench team who are present, but by their paymasters in the Treasury, who have always worried me and who have frankly been holding this back for many years.
	I am pleased that the Secretary of State has promised to write to me about the two points I raised in my intervention. Perhaps he would be kind enough to write to me about a couple of others, too. The first relates to pensioners who should have been getting their pension but who had to receive benefits because the FAS has not paid out. Will the Government guarantee—will the Secretary of State guarantee this to me in writing, if necessary—that benefits paid to pensioners in schemes while they have been waiting will not be claimed back? It seems obvious that they would not be, but successive Governments have often claimed back moneys paid in benefits when people have received compensation. That often happens in respect of injury compensation where people have been on income support.  [Interruption.] I am sorry that Members on the Government Front Bench are not willing to listen to a debate in which some of us have participated for seven hours, but if they could bear with us for a few more minutes, they would then be able to go off to the bar and have a laugh. This is a serious matter. Many people are worried about whether they will have to pay back the benefits. There is a track record of that happening, and I seek assurances from the Government that that will not happen to these pensioners.
	The other issue—I am grateful that the Secretary of State agreed to meet with me about it—is the situation of those who have lost their loved ones while waiting for the compensation to come through. My constituent Dave Cheshire died about two and half years ago and his widow, Marlene Cheshire, does not know what will happen. If the claimants had still been alive, they would receive the full compensation package, but their widows may be in a difficult situation. When the Secretary of State was the Minister of State, he met a delegation of widows from all over the country and he promised to look at the situation then, but it is still a big issue now and of grave concern.
	The other, linked issue is that of claimants who have lost their income while they have been waiting for compensation because they have been unable to work due to sickness. I wrote to the Secretary of State about that recently, because some of my constituents are worried about how much money they will get from the scheme. They want to know whether they can enter the scheme early because they are disabled. It is a technical point, but it is important. If they are not available for work because they are disabled, can they enter the scheme early or do they have to wait for the full version?
	I apologise for bringing those points up at such a late stage, but they are vitally important for the pensioners who are likely to get money from the FAS. They need to know the details so that they can plan their future.
	All of the great work that has been done on the Bill and the consensus that the Government have reached with the Conservatives and the Liberal Democrats is important, but it will be a waste of time unless the public have trust in pensions. The Secretary of State mentioned 12 million people who could join the scheme, but they will not go anywhere near it if they do not have any trust in it. I have been canvassing in the London elections and it is an issue on the doorstep. People are concerned about their futures and whether they can trust anybody with their pension schemes, especially with the banks and the current credit squeeze.
	Many people who lost trust in traditional pension schemes, especially when the occupational schemes started to be wound up, looked to investment in property. A crisis is happening there, alongside the crisis of confidence in the pension scheme. In the eloquent words of Ros Altmann, who was a Government adviser before she helped the occupational pension scheme groups, we have a pension crisis today that could well become a pensioner crisis tomorrow, unless we address the issue of confidence in the pension system.
	It is up to the Government to be the driving force. They have been the driving force on this issue, but—as Conservative Front Benchers have said today—we have heard it all before from both Labour and Conservative Governments. They have claimed that whatever they are proposing is the panacea to the pension problem and will mean that more people will have a decent pension. However, even if this scheme works, we will not solve the problem unless we address the issue of means-testing.
	Earlier on, we heard of the millions of people whom the actuaries assumed would not take up the means-tested benefits. The Minister of State said that he had written numerous times to those who had been pinpointed as the sort of people who should be getting pension credit. After writing a third or fourth time, the Government should take the hint: those people will never apply for pension credit. They see it as a handout and as taboo, and they would be ashamed to claim it. There is no other reason why they should fail to claim it, if the Government have written to them— [ Interruption. ] Ministers are googling away on the Government Front Bench, but if they had listened to the debate they would have heard about the thousands of pensioners who do not take up the pension credit because they see it as a stigma to do so. It is not because of the complicated forms; that is a certain area. It is not because they have not been informed enough; that is a certain area. There are whole areas of this country where pensioners will not take up the credit because they feel that they are going cap in hand. We should have a link to earnings, which should come forward now. If that happened, a lot more people would not be on means-tested benefit, and the savings would be coming across. All through the debate, from both sides of the House, including the Secretary of State's Back Benchers—

Mr. Speaker: Order.
	 Question put and agreed to.
	 Bill accordingly read the Third time, and passed.

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Immigration

That the draft Immigration (Biometric Registration) (Pilot) Regulations 2008, which were laid before this House on 11th March, be approved. —[Alison Seabeck.]

Mr. Speaker: I think the Ayes have it.

Hon. Members: No.
	 D ivision deferred till tomorrow , pursuant to Standing Order No. 41A (Deferred divisions).

ADJOURNMENT (MAY)

Motion made, and Question put forthwith, pursuant to Standing Order No. 25 (Periodic adjournments),
	That this House, at its rising on Thursday 1st May 2008, do adjourn till Tuesday 6th May 2008. — [Alison Seabeck .]
	 Question agreed to.

ADJOURNMENT (WHITSUN)

Motion made, and Question put forthwith, pursuant to Standing Order No. 25 (Periodic adjournments),
	That this House, at its rising on Thursday 22nd May 2008, do adjourn till Monday 2nd June 2008. — [Alison Seabeck .]
	 Question agreed to.

PETITIONS

Policing

Bob Spink: I was told by House officials that I am making history tonight by being the first UK Independence party politician to present a petition.
	It is an honour to present this petition, which represents some 25,000 signatures from British people, many of them serving or ex-police officers. It is a petition about real policing. These people feel that politicians should butt out and enable the police to work to the public's priorities without the imposition of politically set targets and the enormous bureaucracy and paperwork that diverts officers from making our streets safer. I congratulate the superb organiser of the petition, Mr. Hills, and every one of the 25,000 people who supported the national petition, which is very much in tune with my party's principles and policies.
	The petition states:
	The Petition of Johnno Hills, and British citizens,
	Declares that there is great dissatisfaction with target driven policing methods and calls on the Government to drop target driven policing which is undermining public trust and bringing the police into disrepute; and to cut excessive government bureaucracy which leaves our streets devoid of regularly visible police presence so that decent, law abiding citizens are afraid to walk the streets of their own country for fear of becoming crime victims.
	The Petitioners therefore request that the House of Commons implore the Government to cut excessive bureaucracy and ensure police officers spend more time on the streets and to make the role of the PCSOs one which will support the return of regular police officers.
	And the Petitioners remain, etc.
	[P000173]

Post Office Closures (East Londonderry)

Gregory Campbell: I rise to present a petition of some 51 sheets of signatures from constituents who are concerned about the possible closure and significant downscaling of services for sub-post offices in my constituency located at Burnfoot, Ardgarvan, Bolea, Feeney, Drumraighland and Millburn. Closure of those sub-post offices would have a severely detrimental effect on several thousand elderly and disabled people for whom their local post office is not just a focal point but a vital localised delivery mechanism for a range of services that should be expanded rather than curtailed, which is effectively what would happen even for those post offices that would suffer a downscaling.
	The petition states:
	The Petitioners therefore request that the House of Commons urges the Secretary of State for Business, Enterprise and Regulatory Reform to instruct Post Office Ltd. to keep these Post Offices open.
	 Following is the full text of the petition:
	 [ The Petition of those concerned about the proposed closures of the Sub Post Offices, in the East Londonderry Constituency,
	 Declares that the importance of these Post Offices to the local community
	 The Petitioners therefore request that the House of Commons urges the Secretary of State for Business, Enterprise and Regulatory Reform to instruct Post Office Ltd. to keep these Post Offices open
	 And the Petitioners remain, etc.]
	[P000174]

CHILDREN'S HOMES

Motion made, and Question proposed, That this House do now adjourn. —[Liz Blackman.]

Ann Coffey: I welcome the new Children and Young Persons Bill, which aims to reform the statutory framework for the care system and to ensure that children and young people receive high quality care and support. The Bill also aims to improve the outcomes for children in care compared with those of their peers and to improve placement stability. I want to focus tonight on a crucial tool for helping to improve outcomes for children in care and the quality of inspections of children's homes. I have felt strongly about the importance of robust inspection for many years, ever since I was a social worker in the 1980s. In 1984, I introduced a ten-minute Bill to ensure that children's homes of fewer than four children were properly registered, which they were not in those days.
	There are about 6,500 children in children's homes and hostels in England, which is 11 per cent. of the total number of children. The latest data show that those children tend to be older—14 per cent. are aged 10 to 15 years and 23 per cent. are 16 and over. Many of them have complex needs and display challenging behaviour. If we are to improve outcomes for them, it is all the more important that we have high quality care. We need rigorous inspections of children's homes so that poorly run homes can be made to improve or close. It is only with a good care environment that young people will achieve better educational outcomes. Without the support of their corporate parents, that will not be possible. That means not only the social worker but the care home.
	I welcome the measures in the Children and Young Persons Bill to enable registration authorities to issue compliance notices to children's home providers who are failing to meet required standards, and to impose a notice preventing new admissions to an establishment where they are deemed inappropriate. That will make it easier to enforce minimum standards. In order to get to the stage of taking action against homes, however, we need more rigorous inspection regimes to be introduced. We have to ensure that children's homes provide the standards of care necessary to improve outcomes for the children looked after.
	All children's homes are required to be registered under the Care Standards Act 2000. Ofsted is now responsible for the inspection of children's homes, having taken over the role from the Commission for Social Care Inspection in April 2007. Children's homes are subject to detailed statutory regulations and national minimum standards. The framework for inspection reports is the five outcomes in Every Child Matters, which formed the basis of the Children Act 2004. The five outcomes by which children's homes are inspected are being healthy, staying safe, enjoying and achieving, making a contribution and achieving economic well-being. I believe that particularly in relation to children's welfare and running away, some of the minimum care standards and how they translate to the five Every Child Matters outcomes are too general. That can lead to inspection reports that do not show the forensic detail that is needed.
	I became interested in inspections after I was recently alerted by my local community safety team in Stockport to concerns that it had about what it saw as the inadequacies of Ofsted inspection reports on some children's homes in my constituency. The team had catalogued numerous instances of problems involving children at the homes, and felt that the inspection reports did not reflect the true picture of what was actually going on there. The team provided me with evidence of large numbers of children running away, going missing, repeat offending and committing assaults and criminal damage, which was not reflected in the reports under any of the general inspection headings. That antisocial behaviour was causing problems for local residents living near the homes, and the team was worried that if the incidents were not being highlighted, other agencies could not provide the interventions needed to help the young people involved to correct their behaviour.
	Stockport has a very high number of children and young people placed in our children's homes from other local authority areas. Indeed, 53 per cent. of all looked-after children in Stockport are from out of the borough, compared with a national average of 35 per cent. Many of the young people who were causing problems and had attracted the attention of the community safety team had been exported into Stockport from outside the borough. I am pleased that the new Children and Young Persons Bill addresses that problem and is intended to limit out-of-authority placements.
	I decided to apply for reports of 10 children's homes in Stockport from Ofsted, to check for myself the quality of inspections. The first problem that I encountered was getting hold of a copy of the reports, which were not available on the Ofsted website. I applied for them and received a letter saying that my request was being dealt with under the Freedom of Information Act 2000. I objected, and of course I was immediately supplied with the reports, but my point is that they are not easily accessible.
	As I have said, I had detailed statistics about the many incidents of children going missing and about assaults and criminal damage in and around those homes, committed by the residents, yet those statistics were not reflected in the reports. Even without that important information, four of the homes were officially classed as "inadequate", three as "satisfactory" and only three as "good". My point is that the reports contained no context or overview about how often children were getting into trouble or going missing. Without that, we cannot truly assess whether the care provided by the homes helps to manage or stabilise the behaviour of young people, or whether the homes are meeting the standards for safeguarding children under the Every Child Matters criteria. It cannot be right, for example, that the inspection report into one Stockport home failed to mention that one young person had run away 89 times. Another report did not mention that there had been 69 cases of residents going missing, six assaults and 31 incidents of criminal damage nearby.
	Under the regulations, the home should promote and make proper provision for the welfare of children, as well as for the care, education and supervision and, where appropriate, the treatment of children accommodated there. The national minimum standards call for written records of all incidents of absconding and the reasons given by the child for running away. However, there is no requirement for those incidents to be included in the inspection reports and so they are not being reflected under the staying safe criterion. I think that they should be.
	I am particularly concerned that three of the homes in Stockport—all managed by the same organisation—were given notice to improve last year and were classed as "inadequate". Since then, two of those three homes have been inspected again and have now been classed as "satisfactory". However, it is not clear to me what level of improvements have been made to warrant moving from a rating of "inadequate" to "satisfactory". Again, the problem is that the inspection categories are too general.
	Another children's home in Stockport, which has a different owner and charges up to £4,250 a week per child, has sent out advertising flyers trying to attract placements for prolific and priority offenders from areas outside Stockport. The flyers say:
	"Our aim is to drastically reduce offending behaviour and achieve positive outcomes for the most challenging young people".
	However, the community safety team has given me detailed times and dates of incidents involving two clients that reveal that the home is failing dramatically in this stated aim.
	In the case of one young person, who was already electronically tagged, there were more than 35 incidents over nine months. The incidents ranged from assault, burglary, missing from home, criminal damage, punching and biting care workers, and throwing a knife at another resident to stealing a vehicle. The other young person had 15 similar incidents. The relevant Ofsted inspection report did not reflect any of the above cited behaviour.
	After reading the reports on the 10 children's homes in Stockport, I wrote to Ofsted to express my concerns about the lack of thoroughness of the inspection reports. Since then, I have had a very helpful meeting with Michael Hart, Ofsted's children's director, and Andrew Mercer, an assistant divisional manager in the children's directorate. They assured me they had taken on board my concerns and would feed them into the on-going review of national minimum standards for children's homes.
	I am also grateful to the Minister for allowing me the opportunity to raise some of those concerns at a recent meeting. I want, through this debate, to put my concerns on the record, together with what I hope will be his positive response to them.
	I believe that a number of steps can be taken to improve inspections. The first point that I raised was the importance of the reports being made more freely available. I would like to see them published as a matter of course on the Ofsted website, and I understand that Ofsted is now consulting on that. At the moment, the inspection reports only go as a matter of course to the owner of the home, whether local authority or private. I believe that they should go as a matter of course to the placing authority, to the authority in which the home operates, and also to the schools and agencies responsible for tackling crime and disorder in the area. If a home is deemed to be inadequate, the placing authority should put its reasons for continuing the placements on the child's record.
	I would also like statistics to be published that show the number of homes and their inspection categories, so that we can see the impact of inspections in improving standards—just as happens with the school league tables. If local agencies have a responsibility for dealing with the behaviour and education of all looked-after children in their area, they should also be aware of the quality of care being provided.
	I want the reports to be better informed, with inspectors seeking the views of local agencies such as crime reduction partnerships, community safety teams and schools in advance of their visits. I accept the usefulness of random visits but I also feel that, if the police and schools were consulted on their views about the homes and the activities of residents before the visits, the reports would be better informed and consequently more useful. Also, it would encourage homes to work more co-operatively with local agencies if they knew that those agencies would be asked for their views in inspection reports.
	Does the Minister agree that as part of the inspection process, it would be a good idea to invite comments from local crime reduction partnerships, community safety teams and other agencies about antisocial behaviour, offending and running away by young people in such homes to help inform the inspection reports? Does he also agree that it would be useful if schools were consulted about the level of support that care homes provide to pupils, the amount of communication between teachers and care home staff, and the performance of pupils in care?
	I suggest that the national minimum care standards be updated so that inspection reports contain a summary and proper evaluation of all incidents of running away, assaults and criminal damage. That would enable placing authorities better to evaluate the control mechanisms in place in the home, so that they can manage behaviour and assess whether the home properly met the staying safe criterion.
	I pay tribute to my hon. Friend the Member for Warrington, North (Helen Jones) for all her hard work on the all-party group on runaway and missing children. As secretary of that group, I know that many of the 100,000 children who go missing every year come to some harm. One in six is forced to sleep rough or with strangers, and one in 12 is harmed. I would therefore argue that incidents in which children go missing from children's homes should be recorded under the staying safe criterion of the inspection reports. I know that when some children go missing, they are just staying out late at a friend's house, but for others the result is more serious. We must find a way of assessing the seriousness of "missing" incidents and why they happened.
	I am concerned that, owing to the way in which inspection reports are structured, they are not effective tools for achieving minimum standards or improving standards. If we are to improve outcomes for looked-after children, we must not only enforce minimum standards but use inspection reports to drive up standards. Ofsted inspections have been a vital tool in doing that in our schools, but if care standards are to be effective in improving standards in our children's homes, they need to be more prescriptive in what is taken into account in the inspection, need to include other agencies' observations, and must be widely published and available.

Kevin Brennan: I congratulate my hon. Friend the Member for Stockport (Ann Coffey) on securing this debate, and thank her for the great interest that she takes in the subject. It is a long-standing interest, as she pointed out; she first introduced a Bill on the subject in the House in 1984. As she said, she recently met representatives from Ofsted to discuss her concerns. I am glad that that was a positive meeting. I, too, met her recently to discuss what can be done to improve outcomes for young people in care. I also thank her for her welcome for the Children and Young Persons Bill, which will come before the Commons shortly, having had its journey through the House of Lords, and having been broadly welcomed across the sector for the improvements that it tries to make.
	Of course, for a child to succeed in life, they need a stable home life, a safe place to go, significant adults taking a real interest in their life, and a strong sense of family. In short, they need to be cared about, and not just cared for. It is imperative that we focus all our efforts on trying to create that environment for children who do not live with their birth families. My hon. Friend raised a number of important points on the inspection of care homes, both tonight and in her meetings with me and with Ofsted. She mentioned that she has received information relating to specific care homes in her area and has concerns about them. I cannot refer to the specifics of her concerns about those homes, for obvious reasons, but she also raised some wider points that result from those concerns, and I hope that I can address those points.
	I will first try to answer some of the questions that my hon. Friend asked towards the end of her speech. First, on the involvement of other agencies in the inspection process, I understand her concerns about the fact that where the behaviour of children in children's homes is unacceptable and affects the surrounding community, inspection reports should reflect that, and should, as far as possible, take account of information that is available locally. Obviously, that has to be balanced with the need to take a proportionate approach to inspections. Most importantly, those commissioning places in residential provision must have the right information on which to base placement decisions, and must make sure that the placements are right for the children and young people in question.
	To achieve that, the Department is currently supporting the development of standardised contracts for local authorities to use when commissioning services, including in relation to provision in children's homes. The national framework contract for the placement of children in children's homes is underpinned by a number of performance indicators, including some relating to crime and offending behaviour among children placed in the home. The majority of local authorities are already using these contracts and over time they will start to provide the invaluable information that my hon. Friend is looking for, helping to drive up the quality of care.
	My hon. Friend asked about consultation with schools about the support provided to pupils living in care homes. That is a well-made point. In their role as corporate parents, local authorities and the services that they use have a vital part to play in supporting the education of looked-after children. The national minimum standards that she mentioned highlight that point and set out clearly the steps that providers should be taking to make it a reality. For example, children should have a personal education plan setting out a record of their achievements, needs and aspirations, and they should be given access to appropriate educational facilities. The plan should include the names of staff responsible for liaising with schools and other appropriate bodies.
	The national contract for children's homes that I mentioned covers education and includes detailed indicators designed to provide commissioning authorities with information about a home's performance with regard to the education of the children placed there. I would be happy to consider what more could be done to address my hon. Friend's concerns.
	My hon. Friend suggested a pilot to collate information from other agencies in advance of inspection. That is an interesting and innovative suggestion, and I see no reason why that could not happen. I know that she has been in touch with Ofsted to explore the benefits of collating information in advance of inspection.
	My hon. Friend also asked about recording incidents of young people missing from care as part of the inspection process. In her role as part of the all-party group in Parliament, she will know that a cross-departmental working group is looking into the issue of missing children. As part of a programme of work to deliver the "Care Matters" agenda and improve young people's quality of care, we will be revising the existing guidance on children missing from care, and including its requirements as part of our plan to update and re-issue guidance to the Children Act 1989 and subsequent legislation. That will provide us with the opportunity to integrate the guidance on children missing from care homes into this important new revised guidance and at the same time consider whether we need to provide more detail about managing support for especially vulnerable groups, such as potentially trafficked children, to minimise the likelihood of their going missing from their care placement.
	For young people in care, selecting their provision will probably be one of the most important decisions affecting their lives, so when those decisions are made, they must reflect the young person's best interests, be conducted in a timely manner and assure a high level of quality in the provision that will be received. All those commitments were highlighted in the "Care Matters" White Paper.
	Clear planning processes for local authorities, rigorous inspection and enforcement processes, to which my hon. Friend referred, and a world-class care system will be the keys to success. We have already announced a number of measures to support care planning, including drawing together the care planning requirements into a single set of regulations. We will also issue accompanying guidance as part of the revision of the Children Act 1989 statutory guidance. Furthermore, we are piloting regional commissioning arrangements, to support local authorities.
	To ensure that care placements are of a consistently high quality and not just the luck of the draw, the national minimum standards are being revised as part of a wider review. As my hon. Friend rightly points out, those standards must be adhered to and maintained, with swift and decisive action if a service is underperforming. It is important that those processes are transparent.
	In that context, I turn to my hon. Friend's concerns about the accessibility of children's homes inspection reports. Although social care inspection reports are available on the website of the chief inspector and the Office for Standards in Education, Children's Services and Skills, reports relating to children's homes are excluded. The reason given for that is preventing the identification of young people in residential care and ensuring that people accessing the internet with malign intentions are prevented from acquiring their address or any other personal details. While the existing legislative framework does not prevent the publication of children's homes reports, certain information is excluded, such as the address of the children's home. As my hon. Friend has mentioned, the chief inspector will shortly launch a consultation to seek the views of children, service providers and local authorities on whether children's homes reports should be published on the Ofsted website. It is important that the views of the Members of Parliament, such as my hon. Friend, are taken into account in that consultation.
	Finally, we must support care staff in their roles. When I speak to young people in my role, they tell me time and again that what really makes a difference is the people who work with them and the quality of their relationships with significant adults. My Department is working closely with the Children's Workforce Development Council to develop a clear set of standards for residential care staff, which will set out the core skills that they should attain within an agreed and appropriate time scale. That will build on the CWDC's successful work, which has been funded by my Department, to develop standards for foster carers, with the expectation that those standards are met within a year of their being approved. Not only will that model help to ensure consistently high standards across the residential care system, but it will delineate clear progression paths and career development for residential care staff.
	To strengthen the quality of relationships between care staff and young people, we will test the effectiveness of social pedagogy as a method of giving professionals extra skills to improve the quality of care they provide to children—an approach with which my hon. Friend is familiar and which has worked well on the continent. The pilot will run over the next three years, and we will look closely at the results to see whether we should encourage the approach more widely.
	I am confident that, through clear direction from central and local government, rigorous and transparent inspection processes and a world class children's work force, we will achieve excellence for all children in care, which we are all aiming for. I thank my hon. Friend for her commitment on the subject, and I know that she will hold us to account in that important task.
	 Question put and agreed to.
	 Adjourned accordingly at twenty-seven minutes past Ten o'clock.